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NCERT Class 11 Economics Chapter 1 Introduction
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Introduction
Chapter: 1
PART – (A) STATISTICS FOR ECONOMICS
TEXTUAL QUESTION ANSWERS
1. Mark the following statements as true or false.
(a) Statistics can only deal with quantitative data.
Ans: False.
(b) Statistics solve economic problems.
Ans: Trus.
(c) Statistics are of no use to economies Without data.
Ans: True.
2. Make a list of activities in a bus or market place. How many of them are economic activities?
Ans: The following are the activities in a bus or a market place:
(a) Buying goods and services.
(b) Selling goods and services.
(c) Production process carried out by a firm.
(d) People purchasing bus tickets.
(e) Beggars asking for money.
Yes, the above mentioned activities are regarded as economic activities because these activities involve the use of scarce resources to carry out production, consumption, saving and investment etc.
Non-marketing activities include things which are not economic and comprise the exchange system. These are performed for self-consumption. For example subsistence farming, processing of primary products, etc.
3. ‘The Government and policy makers use statistical data to formulate suitable policies of economic development.’ Illustrate with two examples.
Ans: The word statistics is used both in plural as well as in singular sense. In the plural sense statistics means numeric facts which can be used to draw conclusions and in the singular sense it means the statistical methods with the help of which statistical information is used to treat and draw conclusions from them. Statistical data also helps the government to ascertain the relationship between economic variables and form policies accordingly.
For example, if the Indian government aims at increasing the national output, then it formulates its investment expenditure policy based on the capital output ratio in the past few years. Another example could be the preparation of monetary policy. The previous data of inflation and economic growth are taken into consideration for estimating the money supply required in the next period.
4. “You have unlimited wants and limited resources to satisfy them.” Explain this statement by giving two examples.
Ans: The problem of scarcity is the most basic economic problem. Human wants are unlimited and resources to satisfy these wants are limited and these limited resources have alternative uses. ‘Scarcity of resources’ implies that there are unlimited human wants to be fulfilled by limited resources which leads to lesser supply of resources as compared to demand for them. The basic concern of an economy is to allocate the scarce resources to the best possible use in order to satisfy maximum wants. The limited resources have alternative uses which along with the problem of scarcity makes it necessary for an economy to make a choice among various alternatives.
Unlimited wants: Play video games, read books, travel, and hang out with friends every weekend.
Limited resources: You only have 48 hours on the weekend, and you need to allocate time for rest, work, and other responsibilities.
In both examples, you have unlimited wants, but limited resources (stomach capacity, budget, time) to satisfy them. This forces you to make choices and prioritise which wants to fulfil.
5. How will you choose the wants to be satisfied?
Ans: An individual may have unlimited wants but these wants are in an order of priority according to their intensity. An individual fulfils his/her wants according to his/her needs, satisfactions, and priority attached to different wants. Those wants will be fulfilled first that provides the highest satisfaction to the individual and to which the individual has attached the top most priority.
6. What are your reasons for studying economics?
Ans: Human wants are unlimited and resources to satisfy these wants are limited and these limited resources have alternative uses. The basic concern of economics is to allocate the scarce resources to the best possible use in order to derive maximum benefit from the scarce resources. Due to the scarcity of resources having alternative uses, an economy needs to allocate the scarce resources to the areas with maximum possible and optimum returns.
(i) Informed decision making – Economists provide information and forecasting to inform decisions within companies and governments.
(ii) Influences everything – Economic issues influence our daily lives. This includes issues such as tax and inflation, interest rates and wealth, inequality and emerging markets, energy and the environment, etc.
(iii) Impacts all occupations – Studying economics can open up a variety of career options across all sectors of the economy, from agriculture to manufacturing, to banking and consultancy.
(iv) Inspire business success – Understanding how consumers behave is vital for a business to succeed. Economists use theories and models to predict behaviour and inform business strategies.
(v) International perspective – For international corporations, understanding the world economy is key to driving success.
7. Statistical methods are no substitute for common sense. Comment.
Ans: It is absolutely true that statistical methods are no substitute for common sense. For example, when deciding what to wear on a cold day, using a statistical method to analyse the temperature outside is not as useful as simply using your common sense to decide what clothing is appropriate. Similarly, when deciding whether to go to a movie or not, using statistical methods to analyse the reviews of the movie may be helpful, but it is not as useful as using your own common sense and judgement.
It can be understood with the help of given examples. A person who wanted to cross a river with his family but did not know how to swim. He knew the average depth of the river to be 125 cm. His height was 175 cm, that of his wife was 152 cm and his two children measured 120 cm and 90 cm respectively. He calculated the average height of his family and found it to be around 134 cm. He analysed that the average depth of the river was less than the average height of his family and concluded that they all could cross the river safely on foot. This resulted in the drowning of his children. This example proves that common sense must supersede statistical methods.
