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Introduction to Economics

Every individual ranging from a child to an old man is engaged in some economic activity or the other. Consumption is an important economic activity and we all are consumer/ consuming different goods and services for the satisfaction of our wants.

A consumer is one who consumes goods and services for the satisfaction of his wants.

Consumption is the process of using up utility value of goods and services for the direct satisfaction of our wants .Utility value of goods means inherent capacity of goods and services to satisfy human wants.

A producer is one who produces or sell goods and services for the generation of Income.

Production is the process of converting raw materials in to the finished goods.

It is that part of Income which is not consumed. It is an act of alestinence from consumption.

It is expenditure by the procedures on the purchase of such assets which help in to generate Income.
"We defines economics as "The study of Mankind of the ordinary business of life."

Economic Problem
It is the Problem of choice arising on account of the fact that resources are scare and these have alternatives uses.

Three Distinct components of Economics

  1. Consumption
    Consumption is the study of consumer behavior. A standard relationship (The Inverse relationship between price of goods and its purchase).
  2. Production
    Production is the process of consent raw materials in to finished goods. Things become useful as they acquire utility value in the process of production. So that their profit (Profit= Revenue-cost)
  3. Distribution
    A part of Income generated will go to owner of land in the four of went; a part will go to labour in the form of wages; a part will go to owner of capital in the form of Interest and a part will go to entrepreneur in the form of profit.

Statistics means quantitative information or qualification. It needs to be classified, tabulated or it needs to be systematically presented.

  1. Singular Sense
  2. Plural Sense

Statistics- A Plural Noun
In its plural sense, Statistics refers to information in terms of numbers or numerical data, such as terms of numbers or numerical data, such as population statistics, employment statistics.

Data which are Not Statistic

Data which are statistics

A cow has 4 kg.

Average height of 26 plus male people in India is 6 feet compared to 5 feet.

Ram has 100 rupees in his pocket.

Birth rate in India has 18 per thousand to 8 thousand in U.S.A

Statistic are numerical statement of fact in any department of enquiry placed in relation to each other.

Features of Statistic in the Plural Sense

  1. Aggegrate of facts
    A Single number doesn't constitute statistic. No conclusion can be drawn from it. It is only the aggregate number of facts that is called statistic.
  2. Numerically Expressed
    Statistic are expressed in terms of numbers qualitative aspects like 'Small' or 'Big" rich or poor etc are not called statistic. Pathan is tall and Sachin is short has no statistical sense. However, Pathan is 6feet and 2inches and that of Sachin is 5feet and 4inches than those is called statistics.
  3. Affected by Multiplicity of causes
    Statistics by any single factor but are influenced by many factors they been affected by one factor alone then by removing that factors they would lose all their significance.
  4. Reasonable Accuracy
    A reasonable degree of accuracy must be kept in view while collecting statistical data. This accuracy depend on the purpose of investigation.
  5. Placed in relation with each other
    Such numerical alone which called statistics as are mutually related and so comparable. Unless they have the quality of Comparison they cannot be called statistics.
  6. Pre-determined purpose
    Statistics are collected with some pre-determined objectives. Any information collected without any definite purpose will only be numerical value and not statistic.
  7. Enumerated or Estimated
    Statistics may be collected by enumeration or the same be estimated. If the field of Investigation is vast, the procedure of estimation may be helpful.

Statistics - A Singular Noun
In the Singular sense, statistics means science of statistics or statistical method. It refers to techniques or method relating to collection, classification, presentation, analysis and interpretation or quantitative data.

Stage I = Collection of Data
Stage II = Organization of data
Stage III = Presentation of data
Stage IV = Analysis of data
Stage V = Interpretation of data

Importance of Statistics In Economics
"A day might come when the department of economic in the universities will go out of the control of economic theoreticians and come under the control of statistical workshops".

  1. Quantitative expression of economic problem
    Consider any economic problem be it the problem of unemployment, the problem of price rise or the problem of price rise or the problem of shrinking exports. The first task of the economists is to understand its magnitude through its quantitative expression.
  2. Inter-sectoral and Inter- temporal Comparison
    Economists do not stop mainly at the quantitative expression of the problem. They would try to further comprehend it through inter sectoral and inter- temporal comparison.
  3. Working- Out cause and Effect Relationship
    Economist try to find out cause and effect relationship between different sets of Data. This enables them to attempt an effective diagnosis of the problem and accordingly to suggest some remedies.
  4. Construction of Economic Theories or Economic Models
    It is an established. Statistical relationship between different sets of statistical data, offering conclusion of economic significance.
  5. Economic Forecasting
    Economist studies. By the term for casting we do not mean some prediction Thus, on studying the behavior of price level over several years.
  6. Formulation of policies
    Accordingly, tax rates are fixed to get maximum possible revenue with Minimum possible discomfort to the people.
  7. Economic Equilibrium
    "Statistics are the straw out of which I like way other economist, have to make bricks. It is a state of balance for the producer or the consumer where the producer finds that his profit are Maximum.

Limitations of Statistics
Statistics must be regarded as an instrument of research of great value but baring severe limitation which are not possible to overcome.

  1. Study of Numerical fact only
    Statistics studies only such fact as can be expressed in numerical terms. It does not study qualitative phenomena like honesty, friendship, health, justice etc.
  2. Study of Aggregate only
    Statistics of quantitative facts. It does not study any particular unit Average Income will lead to the conclusion that all the three persons belong to Middle class.
  3. Homogeneity of Data, an Essential required
    Data of different qualities and kinds cannot be compared examples production of food grain cannot be compared with the production of cloth.
  4. Result are True only on an Average
    They express only the tendencies. Unlike the laws of physical Science or Chemistry , Statistical observation are not absolutely true. They are not always valid under all condition.
  5. Prone to Misuse
    Statistic may prove true what is actually not true . It is usually said," Statistics are like clay by which you can make a god or a dearl as you please".


#Things To Remember