Welcome in the Class of

Economics XI
By: SUBHASH CHAND PGT
ECONOMICS
J.N.V. DUNGRIN HAMIRPUR H.P

UNIT-1
INTRODUCTION
 MEANING OF ECONOMICS
Economics is a social science of human behaviour
which aims at allocation of scarce resources in such
a way that consumers can maximise their
satisfaction, producers can maximise their profits
and society can maximise social welfare.
 Some important terms :
⚫ Consumer : Consumer is an economic agent who
buys the goods and services to satisfy his wants.
⚫ Producer : is one who produces goods and services
for the generation of Income.
⚫ Production: Production is the process of converting
raw material into useful things .Things become
useful as they acquire utility value in the process of
production.
Saving : It is the part of income which is
not consumed . It can act of abstinence from
consumption.
S=f (Y)

Investment : It is expected by the

producers on the purchase of such assets which
helps to generate income.
Service Holder: A person who is
in job and gives his services as a
factor of production and getting paid
for it . E.g. Govt. Teacher.
Service provider : A person who
provides services to other for payment e.g.
Transporter, auto driver.
 ECONOMIC ACTIVITIES

Activities related to ordinary business

of life which are performed with the
objective of earnings or monetary
gain are called economic activities.
TYPES OF ECONOMIC ACTIVITIES
Non – Economic activities :
Those activities which are not
related to earn money and wealth
.These activities neither generate
income nor increase the flow of
goods & Services . For example a
teacher teaching his own son.
 SCOPE OF ECONOMICS : In
the old days the use of statistics was
restricted to deal with the affairs of the
state . But now a days the scope of statistics
has spread to all those areas where numerical
facts are used such as economics ,business
industry , Medicine, Physics, Chemistry and
numerous other fields of knowledge.
Production : Producers also have limited means
while they have a wide range of goods and services
to choose from for their firms and Factories.

Consumption : Here ,we as students of economics ,

study behaviour of human beings as consumers or
buyers of different goods and services for the
satisfaction of their wants.
Exchange: Refers to the process of give and
take of goods and services among the economic
agents in exchange of money.

Distribution: We are also interested in

knowing how income (generated in the
process of production ) is distributed
among those who have worked as agents
of Production.
PRODUCTION – Refers to increase in flow of
goods and services.
CONSUMPTION-use of goods and services by a
consumer to satisfy his wants.
EXCHANGE- refers to the process of give and take of
goods and services among the economic agents in
exchange of money.
SCARCITY AND ECONOMIC PROBLEMS

Scarcity means acute shortage of a certain commodity

but in economics, it means insufficient supply of a
commodity in relation to its demand.

The problem of making choice is called economic

problem.
 CAUSES OF ECONOMIC
PROBLEMS

Human wants/ ends

Resources/means

Unlimited Limited

Different urgency
Alternative uses

Problems of making choice

 DEFINITION OF ECONOMICS
“Economics is the study of how people and
society choose to employ scarce resources that
could have alternative uses in order to produce
various commodities that satisfy their wants
and to distribute them for consumption among
various persons and groups in society”.
MEANING OF STATISTICS
In simple language, quantitative statement of facts is
called statistics. At the present time statistics is used in
two senses- Plural sense and Singular sense.

Grottfried
Achenwale
STATISTICS :
Statistics means quantitative information or
Quantification of the facts and findings.
But ,how do we get quantitative
information?
There must be a system ,Method or
technique to collect quantitative
information .
 STATISTICS IN PLURAL SENSE
In plural sense statistics simply means data.

Quantitative data: Measured in numerical terms like

Price and income
Qualitative data: Not measured in numerical terms
like beauty and intelligence.

Statistics means quantitative information or quantification of

the facts and findings relating to different phenomena.
 STATISTICS IN SINGULAR SENSE

⚫ In singular sense statistics means ‘statistical methods’.

Collection of data.
⚫ organisation of data
⚫ Presentation of data.
⚫ analysis of data .
⚫ interpretation of data .
Features Of Statistics in the
plural Sense or as Numerical
Data
⚫ Main Features of statistics in terms of numerical
data are :
⚫ Aggregate of facts : A single number does not
constitute Statistics . No conclusion can be drawn
from it.
⚫ Numerically Expressed : Statistics are expressed in
terms of Numbers . Qualitative aspects like small or
big ,rich or poor etc. are not called statistics.
 Multiplicity of causes : Statistics are not affected by any
single factor; but are influenced by many factor.

Reasonable Accuracy: A reasonable degree of accuracy

must be kept in view while collecting statistical Data.
This accuracy depends on the purpose of investigation
,its nature size and available resources.

Pre- determined Objective: Statistics are collected with

some pre –determined objectives. Any information
collected without any definite objective will only be a
numerical value and not Statistics
 Enumerated and Estimated : Statistics may be collected
by enumeration or are estimated . If the field of investigation
is vast , the procedure of estimation may be helpful .For
example , 1 lakh people attend the rally addressed by the
Prime Minister in Delhi and 2 lakh in Mumbai . These
statistics is based on estimation.

Collected in a systematic Manner.: Statistics should be

collected in a systematic manner. Before collecting them . A
plan must be prepared. No conclusion can be drawn from
statistics collected in haphazard manner.
 FUNCTIONS OF STATISTICS

Presentation of facts in precise and

definite form.
Simplification of complexities.
Facilitating comparisons.
Facilitating the formulation of policies.
Widening of human knowledge.
Facilitates the forecasting.
 IMPORTANCE OR USE OF STATISTICS IN
ECONOMICS

Formulation of Economic Laws . Statistics also

helpful in construction of economic laws and
theories.
Helps in understanding and solving an economic
problem. It is also helpful to solve economic
Problem .
Studies of market structures. With the help of
statistics we easily understand about market
structure of any country.
 Importance Of Statistics
⚫ Helpful in Inter-sectoral comparisons :Economist do
not stop merely at the quantitative expression of the
Problems.
⚫ Working out cause and effect relationship : Economists
try to find out cause and effect relationship between
different set of data.
⚫ Quantitative Expression of Economic Problems :
Consider any economic problem , be it the problem of
unemployment , the problem of price . The first task of
the economists is to understand its magnitude through
its quantitative expression.
 LIMITATIONS OF STATISTICS

1. Statistics does not study qualitative

phenomena. Or Study of numerical facts
only.

2. Statistics does not deal with individuals.

Or Study of aggregate only.

3. Statistics can be Misused.( Statistics are

like a clay of which you can make a god or
devil as you please.)
4. Statistical results are true only on average.

5. Only experts can make the Best Possible

use of statistics.

6. Statistical data should be uniform and

homogeneous. Or Homogeneity of data an
essential requirement.
Conclusion : Statistics ,as such ,do not prove anything .
They are simply tools in the hand of the statistician. If
a statistician misuse the data ,then the blame lies
squarely on him and not the subject matter. A
competent doctor can cure a disease by making good
use of the medicine , but the same medicine in the
hand of an incompetent doctor becomes a poison . The
fault in this case is not of the medicine but of the
unqualified doctor. In the same way , Statistics is never
faulty but the fault lies with the users.
 THANKS
By : SUBHASH CHAND
PGT ECONOMICS J.N.V.
Dungrin
HAMIRPUR H.P