Class 11 Economics (Statistics) Chapter 1 Introduction Important Questions with Answers in English

Q. Define statistics.

Answer: Statistics deals with the collection, analysis, interpretation and presentation of numerical data.

Q. What is meant by scarcity?

Answer: The things that satisfy our wants are limited in availability while wants are unlimited; it is the root of all economic problems.

Q. Who is an employer?

Answer: A person who employs somebody, giving them a wage.

Q. What are economic activities?

Answer: Activities undertaken for a monetary gain.

Q. Give one example of qualitative data.

Answer: Gender (man/woman), or degrees of skill (unskilled/skilled/highly skilled).

Q. What are policies in Economics?

Answer: Measures that help solve an economic problem.

Q. How did Alfred Marshall describe economics?

Answer: As “the study of man in the ordinary business of life”.

Q. Distinguish between quantitative and qualitative data with one example each.

Answer: Quantitative data are measured in numbers, e.g. rice production of 106.5 million tonnes (2013-14). (1)
Qualitative data describe attributes that cannot be measured in numbers, e.g. gender or degrees of skill. (1)

Q. Rice production in India was 39.58 million tonnes in 1974-75 and 106.5 million tonnes in 2013-14. Find the total rise and the percentage rise.

Answer: Rise = 106.5 − 39.58 = 66.92 million tonnes (1)
Percentage rise = 66.92 ÷ 39.58 × 100 ≈ 169.1 per cent (½ formula, ½ answer)

Q. State the meaning of consumption and production.

Answer: Consumption: purchase of goods by consumers to satisfy their various needs. (1)
Production: manufacture of goods by producers for the market. (1)

Q. Distinguish between an employee, an employer and a seller with examples.

Answer: 1. Employee: works for some other person and gets paid (wages or salary), e.g. a shop assistant. (1)
2. Employer: employs somebody, giving them a wage, e.g. the shop owner who hires the assistant. (1)
3. Seller: sells goods to make a profit for himself, e.g. a shopkeeper. All three are economic activities because they are for monetary gain. (1)

Q. “Scarcity is the root of all economic problems.” Explain.

Answer: 1. Our wants are unlimited, but the things and resources that satisfy them are limited in availability. (1)
2. So we must choose which wants to satisfy; that is the economic problem. Had there been no scarcity, there would have been no economic problem and no need to study Economics. (1)
3. Everyday examples: long queues at railway booking counters, crowded buses and trains, shortage of essential commodities, the rush for a new film’s ticket. (1)

Q. How do alternative uses of resources give rise to the problem of choice? Give an example.

Answer: 1. Producers’ resources are limited and have alternative uses. (1)
2. Example: at any time land, labour, water and fertiliser in agriculture are given; they can produce food crops or non-food crops such as rubber, cotton, jute. (1)
3. A resource can serve only one use at a time, so we must decide which commodity to produce: this is the problem of choice. (1)

Q. What is the study of distribution? What role does Gross Domestic Product play in it?

Answer: 1. Distribution studies how the national income (total income) is distributed through wages (and salaries), profits and interest (the Recap also lists rents). (1)
2. This total income arising from what has been produced in the country is called the Gross Domestic Product (GDP); its division is what is studied. (1)
3. The book leaves aside income from international trade and investment here. (1)

Q. State the main stages of statistics in order.

Answer: 1. Collection of data. (½)
2. Presentation of data in tabular, diagrammatic and graphic forms. (1)
3. Summarising by numerical indices such as mean, variance, standard deviation, which represent the broad characteristics of the data. (1)
4. Finally, the data are analysed and interpreted. (½)

Q. “Exact facts are more convincing than vague statements.” Explain with the book’s example.

Answer: 1. Statistics presents economic facts in a precise and definite form that helps proper comprehension. (1)
2. “With precise figures, 310 people died in the recent earthquake in Kashmir” is more factual, so it is statistical data. (1)
3. “Hundreds of people died” is vague; it is not statistical data and is less convincing. (1)

Q. A student scores 40, 50, 60 and 90 in four subjects. Find the average marks and state which function of statistics this is.

Answer: Formula: average = sum of marks ÷ number of subjects (½)
Substitution: (40 + 50 + 60 + 90) ÷ 4 = 240 ÷ 4 (½)
Answer: average marks = 60 (1)
Function: condensing, i.e. turning four numbers into one numerical measure that gives overall information. (1)

Q. Explain the basic relationship between Economics and Statistics.

Answer: 1. To understand economic problems we need economic facts in numbers (economic data). (1)
2. Data let us analyse the causes of a problem, e.g. poverty in terms of unemployment, low productivity, backward technology. (1)
3. Without data no analysis is possible, and without analysis no policy can be formulated. That is the basic relationship. (1)

Q. How does statistics help find relationships between economic factors? Give the book’s examples.

Answer: 1. An economist wants to know what happens to demand when a commodity’s price rises or falls, and whether supply is affected by changes in its own price. (1)
2. Whether consumption expenditure rises when average income rises; what happens to the general price level when government expenditure rises. (1)
3. Such questions can be answered only if a relationship exists; whether it exists is verified by applying statistical methods to the data. (1)
4. The economist may assume a relationship and test its validity; this is possible only with statistical techniques. (1)

Q. “Plans and policies need knowledge of future trends.” Explain with the book’s planner example.

Answer: 1. An economic planner has to decide in 2017 how much the economy should produce in 2020. (1)
2. For this, the expected level of consumption in 2020 must be known. (1)
3. One way is a subjective judgement based on a guess; the other is to predict consumption with statistical tools using consumption data of past years or recent surveys. (1)
4. The statistical prediction is more dependable, so statistical methods help formulate appropriate economic policies. (1)

Q. Explain the role of statistics in policy decisions with the oil-import example.

Answer: 1. In a time of rising global oil prices, it may be necessary to decide how much oil India should import in 2025. (1)
2. The decision depends on the expected domestic production of oil and the likely demand for oil in 2025. (1)
3. Neither can be determined without the use of Statistics. (1)
4. So the decision to import cannot be made without knowing the actual requirement of oil, and this vital information can only be obtained statistically. (1)

Q. Why did statistics become necessary for the special studies of modern economics?

Answer: 1. Modern economics includes special studies of the country’s basic problems: why some households earn more, how many are poor, middle-class or rich, how many are illiterate. (1)
2. Before asking the government for action against poverty and disparity, these facts must be known in numbers. (1)
3. The cost of disasters such as Tsunami, earthquakes, bird flu must be collected and put together systematically and correctly. (1)
4. Measuring poverty, income distribution, the link between education and earning, and the effect of environmental disasters all need statistics, so it was added to all modern courses of economics. (1)

Q. Classify into quantitative and qualitative data, with reasons: beauty, intelligence, income earned, marks in a subject, ability to sing, learning skills.

Answer: Quantitative: income earned, marks in a subject (1), because they can be measured in ₹ or marks. (1)
Qualitative: beauty, intelligence, ability to sing, learning skills (1), because they are attributes that cannot be measured in numbers, only stated in degrees (good/better). (1)

Q. Write the definition of economics that many economists use, and state its main elements.

Answer: Definition: “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.” (2)
Elements: (a) scarce resources (b) alternative uses, hence choice (½ + ½)
(c) production and consumption (d) distribution among persons and groups (½ + ½)

Q. In a family the father is 175 cm, the mother 160 cm and two children 95 and 90 cm tall. The river’s average depth is 120 cm, but one part is 150 cm deep. Find the family’s average height and say whether it is safe to cross on the basis of averages.

Answer: Formula: average height = total height ÷ number of members (½)
Substitution: (175 + 160 + 95 + 90) ÷ 4 = 520 ÷ 4 (½)
Answer: average height = 130 cm, more than the average depth of 120 cm (1)
Conclusion: still not safe; the children (95 and 90 cm) are shorter than even the average depth, and in the 150 cm part the water will be 55 and 60 cm above their heads. (1)
An average sums up the group, not each member; statistical methods are no substitute for common sense. (1)

Q. List four activities at a bus stand and say which of them are economic activities.

Answer: 1. A conductor issuing tickets for a salary: economic (employee, for money). (1)
2. A tea vendor selling tea: economic (seller, for profit). (1)
3. A porter carrying luggage for a fee: economic (producer of a service, for money). (1)
4. A passenger’s friend coming to see him off: non-economic, as it is not for money. Test: economic activities are undertaken for a monetary gain. (1)

Q. Describe the functions of statistics with the book’s examples.

Answer: 1. Finding causes: finds the causes of an economic problem with qualitative and quantitative facts; once causes are known, policy is easier. (1)
2. Precise and definite form: exact facts like “310 died in the earthquake” are more convincing than vague ones like “hundreds”. (1)
3. Condensing: reduces mass data to measures such as mean, variance; the average income instead of everyone’s income. (1)
4. Finding relationships: price-demand, price-supply, income-consumption expenditure, government expenditure-price level; testing an assumed relationship. (1)
5. Prediction: impact of today’s investment on future national income; the planner predicting 2020 consumption in 2017. (1)
6. Policy formulation and evaluation: effect of family planning policy; the oil-import decision. (1)

Q. Explain the importance of statistics in economics.

Answer: 1. Without data no economic problem can be analysed, and without analysis no policy can be formed. (1)
2. Statistics is increasingly used to analyse serious problems such as rising prices, growing population, unemployment, poverty, and to find measures to solve them. (1)
3. Evaluating policies: whether family planning policy is effective can be ascertained with statistics. (1)
4. Policy decisions: the oil-import decision depends on expected domestic production and likely demand, known only statistically. (1)
5. Finding relationships and future trends (price-demand, income-consumption; consumption in 2020). (1)
6. Special studies: measuring poverty, income distribution, education and earning, effects of disasters; that is why it was added to all modern courses of economics. (1)

Q. “You have unlimited wants and limited resources to satisfy them.” Explain with two examples and show how the choice is made.

Answer: 1. Aladdin’s wishes were fulfilled by a magic lamp; our wants are equally unlimited, but we have no magic lamp. (1)
2. Example 1 (consumer): pocket money ₹500, wants ₹300 + ₹250 + ₹200 = ₹750; ₹250 is short, so all cannot be met together. (1)
3. Choice: the most wanted things are chosen, e.g. the ₹300 and ₹200 items (₹500 in all); the rest wait. (1)
4. Example 2 (producer): at a given time land, labour, water and fertiliser are fixed; they can grow food crops or rubber, cotton, jute, not all at once. (1)
5. So alternative uses of resources create the problem of choice. (1)
6. Conclusion: scarcity is the root of all economic problems, and the basic teaching of Economics is that with limited means we must rank our wants and choose. (1)

Q. Describe the three conventional divisions of Economics. What does modern economics study beyond them?

Answer: 1. Consumption: how a consumer, given his income and many alternative goods, decides what to buy when he knows the prices. (1)
2. Production: how the producer chooses what and how to produce for the market. (1)
3. Distribution: how the national income (Gross Domestic Product) is divided into wages, profits, rents and interest. (1)
4. Modern economics also makes special studies of basic problems: earning capacity, the poor, middle-class and rich. (1)
5. Illiteracy and job opportunities from education; the cost of disasters such as Tsunami, earthquakes, bird flu. (1)
6. All of these need facts in numbers, which is why Statistics became part of economics. (1)

Q. “Statistical methods are no substitute for common sense.” Explain with the book’s story and one example from daily life.

Answer: 1. Story: a family of four (husband, wife, two children) set out to cross a river; the father knew its average depth. (1)
2. He calculated the family’s average height; it was greater than the average depth, so he thought it safe. But the children drowned. (1)
3. The fault was not the method but the misuse of averages: an average sums up the group, not each member; the deepest part also had to be considered. (1)
4. In numbers: heights 175, 160, 95, 90 cm average 130 cm, yet the children are shorter than even a 120 cm average depth. (1)
5. Daily life: a class average of 60 may look good while some students still fail; assuming all passed from the average alone would be wrong. (1)
6. Conclusion: statistical results must be read with common sense. (1)

Q. Explain the meaning, scope, functions and importance of statistics in economics. Also state one limitation of statistics with an example.

Answer: Meaning (1½): Statistics deals with the collection, analysis, interpretation and presentation of numerical data; it is a branch of mathematics. Stages: collection → presentation (tables, diagrams, graphs) → summarising (mean, variance, standard deviation) → analysis and interpretation.
Scope (1½): used in accounting, economics, management, physics, finance, psychology and sociology; in economics it covers quantitative (rice 39.58 to 106.5 million tonnes) and qualitative (gender, skill) data on consumption, production, distribution and special studies.
Functions (3): finding causes; precise form (310 deaths); condensing (average income); finding and testing relationships (price-demand, income-consumption); prediction (investment and future national income; the 2017 plan for 2020).
Importance (2½): no data, no analysis, no policy; analysing rising prices, population, unemployment, poverty; evaluating family planning policy; the oil-import decision (expected domestic production and likely demand).
Limitation (1½): statistical methods are no substitute for common sense; in the river story the average height (e.g. 130 cm) exceeded the average depth (120 cm), yet the children drowned, because the average was misused.