NCERT Solutions for Class 12 Economics - Introduction (Statistics for Economics)

Quick Recap

Statistics is a method of taking decisions on the basis of numerical data.

Statistics can be defined in two ways:-

1. Singular sense: Statistic Means Statistical methods and techniques related to collection, organisation, classification, Presentation, analysis and Interpretation of data.
2. Plural Sense: Statistics means Numerical facts and figures Which have been systematically collected for a definite purpose in any field of study.

Q2: Make a list of activities that constitute the ordinary business of life. Are these economic activities?
Ans: The following activities constitute the ordinary business of life:

• Buying goods and services.
• Rendering services to a company by employees and workers.
• Selling goods and services.
• Production processes carried out by a firm.

Yes. These activities are economic activities because they involve the use of scarce resources to produce, consume, save or invest. They also involve exchange of money or other resources to earn a livelihood and satisfy wants.

Q3: 'The Government and policy makers use statistical data to formulate suitable policies of economic development'. Illustrate with two examples.
Ans: Statistical data are essential for government planning and policy making. Two clear examples are:

• Setting production targets: If the government wants to increase production in a sector, it examines average production over past years. These data help set realistic targets and design support measures such as subsidies or infrastructure investment.
• Preparing the budget: Past data on government revenues and expenditures allow policymakers to estimate future receipts and allocate funds among priorities such as education, health and infrastructure.

Q4: "You have unlimited wants and limited resources to satisfy them." Explain by giving two examples.
Ans: Scarcity means wants are unlimited while resources are limited. This forces choices. Two examples are:

• Guns versus bread: A country with limited resources must choose between military expenditure (guns) and food production (bread). More resources to one means fewer for the other, so priorities must be set.
• Personal budget decision: With a limited budget of Rs. 20,000, an individual cannot buy both a new television and a sofa set at the same time. They must choose according to priorities and urgency.

Q5: How will you choose the wants to be satisfied?
Ans: An individual chooses wants to satisfy by considering:

• Needs and priorities: Wants that are urgent and important are chosen first.
• Satisfaction (utility): The want that gives higher satisfaction is preferred.
• Availability and cost: Whether the good is available and affordable affects the choice.
• Budget constraint: Limited income forces trade-offs among alternatives.

Taken together, urgency, priority and the satisfaction expected from a want determine which wants are satisfied first.

Q6: What are your reasons for studying Economics?
Ans:  The need to study economics arises because societies and individuals must make choices under scarcity. Economics explains how scarce resources can be allocated to achieve the best outcomes. Key reasons include:

• Theory of Consumption: Helps us understand how consumers choose goods to maximise satisfaction given income and prices.
• Theory of Production: Explains how producers combine inputs to produce goods and how they minimise costs to maximise profits.
• Theory of Distribution: Shows how national income is divided among factor owners as wages, rent, interest and profit.
• Macroeconomic Problems: Provides tools to analyse problems like poverty, unemployment and income inequality and suggests corrective measures.

Overall, studying economics helps to understand how resources are managed and how policy choices affect society.

Q7: Statistical methods are no substitute for common sense. Comment.
Ans: Statistical methods are powerful, but they must be used with common sense. Data can be misinterpreted or presented in a misleading way because of biased collection, selective reporting, political influence, or errors in measurement. For example, a higher death rate in regions with more doctors may reflect better reporting or an older population rather than worse health care. Therefore, one should critically examine how data were collected, consider context, and not accept numerical results at face value. Common sense and careful judgement are needed alongside statistical analysis.

Frequently Asked Questions

Q1: What are the tools used, related to statistical study?
Ans: The tools used in statistical studies include:

• Census or sampling techniques
• Tally bars for data assembly
• Graphs, tables, and diagrams
• Averages and percentages
• Regression coefficients and correlation
• Degree of relation between variables

These tools are essential for organising, summarising and analysing data so that meaningful conclusions can be drawn.

Q2: What is inferential statistics?
Ans: Inferential statistics refers to methods used to draw conclusions about a larger population from a sample. It allows researchers to make predictions or generalisations beyond the data actually observed.

Q3: What is descriptive statistics?
Ans: Descriptive statistics refers to methods used for the collection, presentation and analysis of data. Common tools include:

• Measurement of central tendency (mean, median, mode)
• Measurement of dispersion (range, variance, standard deviation)
• Measurement of correlation (relation between variables)

Descriptive statistics summarise the main features of a dataset and make it easier to understand and communicate the information.