Business Statistics

B.B.A.LL.B (Hons.) – III semester

Grand Viva Topics
Session- 2022-23

Faculty: Asst. Prof. Ami Agrawal

1. What do you mean by the term “Statistics”? What are the uses, importance, scope and
limitations of Statistics?
Answer: Statistics may be defined as the collection, presentation, analysis and interpretation of
numerical data.
Statistics is a set of decision-making techniques which helps businessmen in making suitable
policies from the available data. In fact, every businessman needs a sound background of
statistics as well as of mathematics.
The purpose of statistics and mathematics is to manipulate, summarize and investigate data so
that the useful decision-making results can be executed.
Statistics Meaning
The term ‘statistics’ has been derived from the Latin word ‘status’ Italian word ‘statista’ or
German word ‘statistik’.

All these words mean ‘Political state’. In ancient days, the states were required to collect
statistical data mainly for the number of youngmen so that they can be recruited in the Army.

Also to calculate the total amount of land revenue that can be collected. Due to this reason,
statistics is also called ‘Political Arithmetic’.

Statistics Definition
Statistics has been defined in different ways by different authors.
Statistics are numerical statements of facts in any department of enquiry placed in relation to
each other.Bowley
By statistics, we mean quantitative data affected to a marked extend by multiplicity of
causesYule and Kendall
By statistics, we mean aggregate of facts affected to a marked extent by multiplicity of causes,
numerically expressed, enumerated or estimated according to reasonable standards of accuracy,
collected in a systematic manner for a predetermined purpose and placed in relation to each
other.Horace Secrist
Statistics may be defined as the collection, presentation, analysis and interpretation of numerical
data.Croxton and Cowden

Uses of Statistics in Business Decision Making

Uses of Statistics in Business
The following are the main uses of statistics in various business activities:

 With the help of statistical methods, quantitative information about production, sale,
purchase, finance, etc. can be obtained. This type of information helps businessmen in
formulating suitable policies.

 By using the techniques of time series analysis which are based on statistical methods,
the businessman can predict the effect of a large number of variables with a fair
degree of accuracy.

 In business decision theory, most of the statistics techniques are used in taking a
business decision which helps us in doing the business without uncertainty.

 Nowadays, a large part of modern business is being organised around systems of

statistical analysis and control.

 By using ‘Bayesian Decision Theory’, the businessmen can select the optimal
decisions for the direct evaluation of the payoff for each alternative course of action.
Uses of Mathematics for Decision Making
 The number of defects in a roll of paper, bale of cloth, sheet of a photographic film
can be judged by means of Control Chart based on Normal distribution.
 In statistical quality control, we analyse the data which are based on the principles
involved in Normal curve.
Uses of Statistics in Economics
Statistics is the basis of economics. The consumer’s maximum satisfaction can be determined on
the basis of data pertaining to income and expenditure. The various laws of demand depend on
the data concerning price and quantity. The price of a commodity is well determined on the basis
of data relating to its buyers, sellers, etc.

Functions of Statistics
Statistics can be well-defined as a branch of research which is concerned with the development
and application of techniques for collecting, organising, presenting, analysing and interpreting
data in such a manner that the reliability of conclusions may be evaluated in terms of probability
statements.

Statistical methods and processes are useful for business development and, hence, applied to
enormous numerical facts with an objective that “behind every figure, there’s a story”.

Some key functions of statistics are as follows:

 Condensation
 Comparison
 Forecast
 Testing of hypotheses
 Preciseness
 Expectation
Condensation
Statistics can be used to compress a large amount of data into small meaningful information; for
example, aggregated sales forecast, BSE indices, GDP growth rate, etc. It is almost impossible to
get a complete idea of the profitability of a company by looking at the records of its income and
expenditure. Financial ratios such as return on investment, earnings per share, profit margins,
etc., however, can be easily remembered and thus can be used in quick decision making.

Comparison
Statistics facilitate comparing different quantities. For example, the price-to-earnings ratio of
ITC as of January 22, 2021 is 19.54 as compared to HUL. HUL is overvalued, quoting a price-
to-earnings ratio of 71 times.

Forecast
Statistics helps forecast by looking at trends of a variable. It is essential for planning and
decision-making. Predictions or forecasts based on intuition can be disastrous for any business.

For example, to decide the production capacity for a vehicle-manufacturing plant, we need to
predict the demand for the product mix, supply of components, cost of manpower, competitor
strategy, etc., over the next 5 to 10 years, before committing an investment.

Testing of hypotheses
Hypotheses are statements about population parameters based on knowledge from literature that
a researcher would like to test for validity in the light of new information. Drawing inferences
about the population using sample estimates involves an element of risk.

Preciseness
Statistics visualises and presents facts precisely in a quantitative form. Facts and information
conveyed in quantitative terms are more convincing than qualitative data. For example, ‘increase
in profit margin is less in the year 2020 than in the year 2019’ does not convey a precise and
complete piece of information.

On the other hand, statistics summarise the information more precisely. For example, ‘profit
margin is 5% of the turnover in the year 2020 against 7% in the year 2019’.

Expectation
Statistics can act as the basic building block for framing clear plans and policies. For example,
how much raw material to be imported in a year, how much capacity to be expanded, or
manpower to be recruited, etc., depends on the expected value of outcome of our decisions taken
under different situations.

Importance of Statistics
Statistics in today’s life has become an essential part of various business activities which is clear
from the following points.

The importance of statistics in the following major areas:

1. Importance of Statistics in Business and Industry

2. Importance in the Field of Science and Research
 3. Importance in the Field of Banking
4. Importance to the State
5. Importance in planning
Importance of Statistics in Business and Industry
In past days, decisions regarding business were made only on personal judgement. However, in
these days, they are based on several mathematical and statistical techniques and the best
decision is arrived by using all these techniques.

For example, by using the testing hypothesis, we can reject or accept the null hypothesis which
are based upon the assumption made from the population or universe

By using ‘Bayesian Decision Theory’ or ‘Decision Theory’, we can select the optimal decisions
for the direct evaluation of the payoff for each alternative course of action.

Mathematics and statistics have become ingredients of various decisions problems which is clear
from the following:

 In Selecting Alternative Course of Action: The process of business decisions involve

the selection of a single action among some set of alternative actions. When there are
two or more alternative courses of action, and we need only one course of action,
statistical decisions theory helps us in selecting the required course of action by
applying Bayesian decision theory and thus saves lot of time.

 In Removing Uncertainty: In decision-making problems, uncertainty is very common

in a situation, when the course of action is not known to us. When there are many
possible outcomes of an event, we cannot predict with certainty that what will happen.
By applying the concept of joint and conditional probability, the uncertainty about the
event can be removed very easily.

 In Calculating E.O.L., C.O.L., etc.: In business, the opportunity loss is very often,
which can be defined as the difference between the highest possible profit for an event
and the actual profit obtained for the actual action taken. The expected opportunity
loss (E.O.L.) and conditional opportunity loss (C.O.L.) can be easily calculated by
using the concept of maximum and minimum criteria of pay-off.

Scope of Statistics
The following are the main scope of statistics:

1. Presents facts in numerical figures

2. Presents complex facts in a simplified form
3. Studies relationship between two or more phenomena
4. Helps in the formulation of policies
5. Helps in forecasting
6. Provides techniques for testing of hypothesis
7. Provides techniques for making decisions under uncertainty
Presents facts in numerical figures
The first function of statistics is to present a given problem in terms of numerical figures. We
know that the numerical presentation helps in having a better understanding of nature an of
problem.

Presents complex facts in a simplified form

Generally, a problem to be investigated is represented by a large mass of numerical figures
which are very difficult to understand and remember. Using various statistical methods, this
large mass of data can be presented in a simplified form.

Studies relationship between two or more phenomena

Statistics can be used to investigate whether two or more phenomena are related. For example,
the relationship between income and consumption, demand and supply, etc.

Helps in the formulation of policies

Statistical analysis of data is the starting point in the formulation of policies in various economic,
business and government activities.

For example, using statistical techniques a firm can know the tastes and preferences of the
consumers and decide to make its product accordingly.

Helps in forecasting
The success of planning by the Government or of a business depends to a large extent upon the
accuracy of their forecasts. Statistics provides a scientific basis for making such forecasts.

Provides techniques for testing of hypothesis

A hypothesis is a statement about some characteristics of a population (or universe).

Limitations of Statistics
Statistics is considered to be a science as well as an art, which is used as an instrument of
research in almost every sphere of our activities.

Some of the limitations of statistics are as follows:

1. Statistics Suits to the Study of Quantitative Data Only

2. Statistical Results are not Exact
3. Statistics Deals with Aggregates Only
4. Statistics is Useful for Experts Only
5. Statistics does not Provide Solutions to the Problems
Statistics Suits to the Study of Quantitative Data Only
Statistics deals with the study of quantitative data only. By using the methods of statistics, the
problems regarding production, income, price, wage, height, weight etc. can be studied. Such
characteristics are quantitative in nature.

The characteristics like honesty, goodwill, duty, character, beauty, intelligence, efficiency,
integrity etc. are not capable of quantitative measurement and hence cannot be directly dealt
with statistical methods. These characteristics are qualitative in nature.

In such type of characteristics, only comparison is possible The use of statistical methods is
limited to quantitative characteristics and those qualitative characteristics which are capable of
being expressed numerically.
Statistical Results are not Exact
The task of statistical analysis is performed under certain conditions. It is not always possible,
rather not advisable, to consider the entire population during statistical investigations.

The use of samples is called for in statistical investigations. And the results obtained by using
samples may not be universally true for the entire population. Data collected for a statistical
enquiry may not be hundred percent true. Statistical results are true on an average.

Statistics Deals with Aggregates Only

Statistics does not recognise individual items. Consider the statement, “The weight of Mr X in
the college is 70 kg”. This statement does not constitute statistical data. Statistical methods are
not going to investigate anything about this statement. Whereas, if the weights of all the students
of the college are given, the statistical methods may be applied to analyse that data.

According to Tippett, “Statistics is essentially totalitarian because it is not concerned with

individual values, but only with classes”. Statistics is used to study group characteristics of
aggregates.

Statistics is Useful for Experts Only

Statistics is both a science and an art. It is systematic and finds applications in studying problems
in Economics, Business, Astronomy, Physics, Medicines etc. Statistical methods are
sophisticated in nature. Everyone is not expected to possess the intelligence required to
understand and to apply these methods to practical problems. This is the job of an expert, who is
well-versed with statistical methods

Statistics does not Provide Solutions to the Problems

The statistical methods are used to explore the essentials of problems. It does not find use in
inventing solutions to problems. For example, the methods of statistics may reveal the fact that
the average result of a particular class in a college is deteriorating for the last ten years, i.e., the
trend of the result is downward, but statistics cannot provide solution to this problem.

It cannot help in taking remedial steps to improve the result of that class. Statistics should be
taken as a means and not as an end. The methods of statistics are used to study the various
aspects of the data.
2. Explain the difference between:
(a) Central tendencies and measures of dispersion
What is central tendency?

Central tendency refers to and locates the center of the distribution of values. Mean,
mode, and median are the most commonly used indices in describing the central
tendency of a data set. If a data set is symmetric, then both the median and the mean
of the data set coincide with each other.

Given a data set, the mean is calculated by taking the sum of all the data values and
then dividing it by the number of data. For example, the weights of 10 people (in
kilograms) are measured to be 70, 62, 65, 72, 80, 70, 63, 72, 77 and 79. Then the
mean weight of the ten people (in kilograms) can be calculated as follows. Sum of
the weights is 70 + 62 + 65 + 72 + 80 + 70 + 63 + 72 + 77 + 79 = 710. Mean =
(sum) / (number of data) = 710 / 10 = 71 (in kilograms). It is understood that
outliers (data points that deviate from the normal trend) tend to affect the mean.
Thus, in the presence of outliers mean alone will not give a correct picture about the
center of the data set.

The median is the data point found at the exact middle of the data set. One way to
compute the median is to order the data points in ascending order, and then locate
the data point in the middle. For example, if once ordered the previous data set
looks like, 62, 63, 65, 70, 70, 72, 72, 77, 79, 80. Therefore, (70+72)/2 = 71 is at the
middle. From this, it is seen that median need not be in the data set. Median is not
affected by the presence of the outliers. Hence, median will serve as a better
measure of central tendency in the presence of outliers.

The mode is the most frequently occurring value in the set of data. In the previous
example, the value 70 and 72 both occurs twice and thus, both are modes. This
shows that, in some distributions, there is more than one modal value. If there is
only one mode, the data set is said to be unimodal, in this case, the data set is
bimodal.

What is dispersion?

Dispersion is the amount of spread of data about the center of the distribution.
Range and standard deviation are the most commonly used measures of dispersion.

The range is simply the highest value minus the lowest value. In the previous
example, the highest value is 80 and the lowest value is 62, so the range is 80-62 =
18. But range does not provide a sufficient picture about the dispersion.
 To calculate the standard deviation, first the deviations of data values from the
mean are calculated. The root square mean of deviations is called the standard
deviation. In the previous example, the respective deviations from the mean are (70
– 71) = -1, (62 – 71) = -9, (65 – 71) = -6, (72 – 71) = 1, (80 – 71) = 9, (70 – 71) = -
1, (63 – 71) = -8, (72 – 71) = 1, (77 – 71) = 6 and (79 – 71) = 8. The sum of squares
of deviation is (-1)2 + (-9)2 + (-6)2 + 12 + 92 + (-1)2 + (-8)2 + 12 + 62 + 82 = 366. The
standard deviation is √(366/10) = 6.05 (in kilograms). Unless the data set is greatly
skewed, from this it can be concluded that the majority of the data is in the interval
71±6.05, and it is indeed so in this particular example.

(b) Correlation and regression

(c) Types of Index numbers with applications

In the study of statistics, index numbers are the utmost requisite. Imagine how it would be
without these numbers while you change the variable in the estimation of any particular
statistics! The procedure itself will turn out to be completely ineffective. Thus, index numbers
are the measurement of any change in a variable or variables across a determined period. These
numbers show a general relative change and not a direct measurable figure. An index number is
expressed in the percentage form.
Let us know more about the Index numbers – their importance, characteristics, types, and
limitations will be discussed accordingly. We also have included a bonus section, continue to
study the content to find out the same.

Importance of Index Number

Index numbers are most commonly used in the study of the economic status of a particular
region. As mentioned, the index number defines the level of a variable relative to the level in a
particular period of time span. These index numbers serve as a measure to study the change in
the effects of all the factors that cannot be measured or estimated on a direct basis.

Thus, Index numbers occupy an important place due to their efficacy in measuring the extent of
economic changes across a stipulated period. It helps to study such changes' effects due to
factors that cannot be directly measured.

How would You identify an Index Number? – Features and Characteristics of Index
Numbers
The main highlighting features of index numbers are mentioned as below–
 It is a special category of average for measuring relative changes in such instances where
absolute measurement cannot be undertaken
 Index number only shows the tentative changes in factors that may not be directly
measured. It gives a general idea of the relative changes
 The method of index number measure alters from one variable to another related variable
 It helps in the comparison of the levels of a phenomenon concerning a specific date and
to that of a previous date
 It is representative of a special case of averages especially for a weighted average
 Index numbers have universal utility. The index that is used to ascertain the changes in
price can also be used for industrial and agricultural production.

Types of Index Numbers

There are various types of index numbers that have particular usage. We will study the types of
Index numbers to know the same. This section which is related to the types of Index numbers
will help the students to understand the importance of each type in regard to the task which is
practiced for.

Value Index
A value index number is formed from the ratio of the aggregate value for a particular period with
that of the aggregate value that is found in the base period. The value index is utilized for
inventories, sales, and foreign trade, among others.

Quantity Index
A quantity index number is used to measure changes in the volume or quantity of goods that are
produced, consumed, and sold within a stipulated period. It shows the relative change across a
period for particular quantities of goods. Index of Industrial Production (IIP) is an example of
Quantity Index.

Price Index
A price index number is used to measure how price alters across a period. It will indicate the
relative value and not the absolute value. The Consumer Price Index (CPI) and Wholesale Price
Index (WPI) are major examples of a price index.

Uses of Index Number in Statistics

We have known the features and types of the Index numbers. For a further comprehensive study,
we will now discuss the uses of Index numbers.

Index numbers are useful in many basic to complicated studies. Like it is used in the basic study
of human population in a country and also it is used to determine the extinction rate of the rare
animals in a particular region. There are many more usages of Index Numbers, let us find out:
 It helps in measuring changes in the standard of living as well as the price level.
 Wage rate regulation is consistent with the changes in the price level. With the
determination of price levels, wage rates may be revised.
 Government policies are framed following the index number of prices. This price
stability inherent to fiscal and economic policies is based on index numbers.
 It gives a pointer for international comparison concerning different economic variables—
for instance, living standards between two countries.

Advantages of Index Number

The advantages of Index numbers are directly linked with their usages. So the summation
advantages are studies as under:
 It adjusts primary data at varying costs, which is useful for deflating. It facilitates the
transformation from nominal wage to real wage.
 Index numbers find extensive usage in economics and help in the framing of appropriate
policies. Such findings help with the establishment of researches as well.
 It helps in the case of trends such as drawing outcomes for irregular forces and cyclical
forces.
 Index numbers can be leveraged in case of future development of activities in the
economic sphere. This time series analysis is utilized for the determination of trends and
cyclical developments.
 The number is useful in measuring the changes that take place in the standard of living in
different countries over an established period.

Limitations of Index Number

We know everything existing has both advantages and limitations. Index numbers have a lot of
advantages, but to an extent, this is when their limitations creep up. The limitations of index
numbers are as follows:
 There are chances for errors given that index numbers come as a result of samples. These
samples are put together after deliberation, which creates chances for errors. It can also
be found in weights or base periods etc.
 It is always calculated based on items. Items that are so selected may not exactly be in
trend, which in turn creates an inaccurate analysis.
 Multiple methods can be used to formulate index numbers. Due to this multiplicity of
methods, outcomes may bring forward a different set of values which may further lead to
confusion.
  The index numbers show the approximate indications of the relative changes that occur.
Moreover, the changes in variables that are compared over a prolonged time may fall
short on reliability.
 The selection of representative commodities may be skewed. It is since these
commodities are based on samples

3. Using the formula calculate mean, mode, median, mean deviation and standard deviation
from the following data:

Marks: 0-10 10-20 20-30 30-40 40-50 50-60

No. of students: 10 20 30 50 40 30
Answer: https://byjus.com/question-answer/obtain-the-mean-median-and-mode-of-the-
following-data-marks-0-10-10-20/

4. Calculate Karl Pearson’s coefficient from the following data:

X: 40 45 42 28 48 20 36 40
Y: 50 47 40 38 45 28 38 48
 5. “Statistics if the most dangerous in the hands of inexpert” Discuss and explain this
limitation of statistics?

Answers: Limitations of Statistics

Despite its immense use, Statistics has many limitations. These are as follows:

Deals in Quantitative Data

Statistics deals only with quantitative data and not the qualitative and descriptive facts
like efficiency, intelligence, honesty, blindness, etc.

Studies Groups not Individuals

Statistics does not deal with individuals but with groups. This is one of the biggest limitations of
statistics. To give you an example, the income of an individual or profit of a particular business unit
is not statistics since those figures are unrelated and incomparable.

On the other hand, the aggregate of figures relating to prices and consumption of various
commodities and over varying time periods are statistics.

Statistics is an inexact science

Statistical laws are not exact. In fact, the results are true only on averages. Also, they are valid only
under a certain set of assumptions. Therefore, the science of statistics is less exact than natural
sciences like physics, chemistry, etc.
Misuse

Statistics deal with figures which are innocent in themselves and can be easily manipulated or
distorted by people for their selfish motives. Therefore, it is a dangerous tool in the hands of a non-
expert.

It is hence important that the user of the statistical methods has sound knowledge of the subject
along with the self-control of an artist.

According to Prof. W.I. King, “Statistics are like clay from which you can make a God or a devil as
you please.” He also said that “The science of statistics is the useful servant but only of great values
to those who understand its proper use.”

Distrust of Statistics

By definition, distrust means a lack of confidence or belief. Further, the science of statistics is
always subject to doubt and suspicion because of its misuse by unscrupulous elements for their
selfish motives. The common beliefs about statistics are:

 One ounce of truth can produce tonnes of statistics

 Statistics can prove anything

 It can prove nothing

 Figures don’t lie; cheater make figures up

 There are three types of lies – lies, damn lies, and statistics

 Numbers, though accurate, are open to manipulation by selfish people to conceal the
truth and present a distorted picture of the facts.
Therefore, it is important to understand that statistics is a tool, which if misused can cause a
disaster. Statistics neither approves or disapproves anything. Hence, you must take utmost care and
precaution while interpreting statistical data in all manifestations.

6. What is a Questionnaire? What are the essentials of a good Questionnaire?

Answers: Meaning of questionnaire:
A questionnaire is a research instrument used by any researcher as a tool to collect data
or gather information from any source or subject of his or her interest from the
respondents. It has a specific goal to understand topics from the respondent’s point of
view. It consists of a set of written or printed questions with a choice of answers devised
for survey or statistical studies. It is the most popular type of primary data collection,
which can be used to gather both quantitative data ( in form of numerals) and qualitative
data (in form of words and figures) or mixed data, which is a continuation of both
quantitative and qualitative data.
Types of Questionnaires:
In a broader sense, there are two types of questionnaires:
 Structured questionnaire: It is also known as a closed questionnaire where such questions
are asked, which can be answered as yes or no. It includes less number of researchers and
a large number of respondents, and it has definite and concrete questions. These types of
questionnaires are formal and are prepared well in advance.
Unstructured questionnaire: It is based on a more open questionnaire. An open
questionnaire means recording more data, as the respondents can point out what is more
important for them in their own words and methods, as responses can go to any length.
This type of questionnaire is quite flexible and can be applied to several areas of study as
they do not require much planning and time.
Qualities of a Good Questionnaire:
1. Limited Number of questions: The number of questions in the questionnaire should be
as limited as possible, and questions should be asked only related to the purpose of the
inquiry.

2. Proper sequence of questions: Questions must be placed in the proper sequence, like
simple and direct questions must be placed at the start of the questionnaire, and hard and
indirect questions must be placed at the last.

3. Simplicity: The language of the questions should be simple and easy to understand,
and the questions should be short. Complex questions must be avoided.

4. Instructions: A good questionnaire must have clear and proper instructions for filling
out the forms.

5. No undesirable questions: Undesirable questions like personal questions, which can

offend the respondents, must be avoided.

6. Non-controversial question: The question should be asked in such a way that they can
be answered impartially.

7. Calculations: Questions involving calculations must be avoided, as they can be complex

and time-consuming..
What are the qualities of a good questionnaire.?
1. Brief and Limited Questionnaire:
The number of questions in a schedule should be brief and limited as possible. Only relevant
questions to the problem under investigation should be added.

2. Simple and Clear:

The questions should be simple, clear and precise. Its language should be very simple so that
informants may easily understand.
 3. Unambiguous Questions”:
All unambiguous questions should be avoided at all, complicated and long-worded
questions irritate the respondents which results in careless; replies.

4. No Personal Questions:
No personal question should be asked from, respondents. Such questions should be
avoided.

5. Use of Proper Words:

Questions should be framed with right words. This ensures the validity.

6. Avoidance of Calculations:
Questions should not be based on calculations. Only those questions should be asked which
the respondents may reply immediately. Moreover, questions should avoid memories.

7. Only Objective Questions:

The questions should be objective. It should be based on opinions of the individuals.

8. Sequence of the Questions:

The arrangement of the questions should be such so that no question may slip back. It must
involve a logical flow of questions.

9. Pre-testing:
Before sending the questionnaire to the respondents, it must be properly tested.

10. Instructions:
Precise and simple instructions of filling the questionnaire should be added in the foot note.

11. Cross Examination:

The questionnaire should be set in such a way that there may be cross examination of the
information supplied by the informants. In fact, it is a check on false or inaccurate
answers.

12. Secret Information:

Every respondent should be ensured that information given by them shall be kept secret.

13. Attractive Questionnaire:

Proper care should be taken to make the questionnaire attractive. A well set questionnaire
will certainly impress the recipient.
 Objective-type questions: More focus should be given to objective-type questions,
whereas subjective-type of questions should be avoided.

Q7.What do you mean by Primary data? What are the methods of collecting primary data?
Also specify their pros and cons.
Answer: What is Primary Data ?

The data collected by the researcher himself for finding the solution of a particular problem
or situation, is known as primary data. This type of data is characterized by its originality as
it is freshly collected. Various organisations conduct surveys, observations, interviews, etc.
and as a result generate primary data. Although secondary data provides a basic
understanding to the research problems, but sometime, it becomes necessary to collect
primary data as the previously generated secondary data may not serve the purpose. Just like
secondary data, researchers should also take additional care while collecting primary data
such that it is accurate, reliable, and unbiased. For collecting primary data, researchers need
to take many decisions regarding proper selection of relevant sources, sampling techniques,
research tools, etc.

Definition of Primary Data

According to W.A. Nelswanger :

"A primary source is a publication in which the data are published by the same authority
which gather and analyse them".
To conduct any research effectively and produce valid results, researchers should collect
primary data as it contains current and exact information about the incident or event. One of
the major benefits of primary data is that its validity and reliability can be verified by other
experts. There are many ways to collect primary data such as observation, interviews, group
discussions, case studies, etc.

Features of Primary Data

Following are the characteristics of primary data :

1) Collected for the First Time :

Since the primary data are collected for the first time with an objective, they are natural and
available in raw stage. They are required to be analysed in systematic way to reach the
conclusions. However, status of secondary data is just opposite and they are already
processed after analysis.

2) Collected from the Source :

These are generated after personal interactions or observations of original sources or through
deputed personnel for the task. These are obtained after certain experimental results, close
study of sample cases, first hand encounters of the situations and selection of resources at
free will, without following any sequence or particular methods. The data thus collected is
needed to be analysed by a team of experts to arrive at conclusions who may even decide to
re-confirm the validity of data by re-examining certain observations.

3) Considered Prospective in Nature :

The data is generated from first adventure and provides. some links on probable happenings
in future. These can be taken as baseline and follow up action can be evolved only after the
thorough analysis of the data.

4) Volume of Data :
The primary data is at raw stage and researchers need to do thorough study step-by-step and
summarize it to use it efficiently. Researchers find the values of data statistically in a
presentable format or in simple statements so that the outcome is easily understood by the
general public.

5) Specific Research Objective :

Primary data is collected with specific objective and can be used to generate information
which is reliable and effective to a large extent after extensive analysis and refinements. The
primary date can be collected through different modes like close monitoring, in-depth study
of results of different groups, opinion polling at different locations, recording reaction of
general public and making tactical operations to unearth the truth hidden behind the screen.

Sources of Primary Data

Primary data are collected during the course of doing experiments in an experimental
research but in case we do research of the descriptive type and perform surveys, whether
sample surveys or census surveys, we can obtain primary data either through observation or
through direct communication with respondents in one form or another or through. personal
interviews. Thus, in other words, means that there are several methods of collecting primary
date, particularly in surveys and descriptive researches. Important ones are :
Methods of collecting primary data

Major tools and techniques for collecting primary data are as follows :

1) Interview :
Interview is the exchange of ideas. which takes place between two more people with the
purpose of getting information from the respondent. In this method, the interviewer organises
a meeting with the respondent regarding an object or issue related to the research objective,
and asks some questions. The responses of the interviewee are recorded and compiled to get
a better insight into the research problem. Interview-can be conducted through various
methods such is personal interview. telephonic interview, nail interview, panel interview, etc.

2) Questionnaire :
In order to collect the relevant information from the respondents by asking questions, it is
necessary to design a questionnaire comprising of questions related to the research problem.
Questionnaire is used to explore the unidentified facts and figures about a particular
objective or issue. The responses of the individuals about the research problem are kept
confidential. Questionnaires are the standardized and structured forms that are usually filled
by the respondents. Questionnaires can be administered personally as well as through mail.
When the questionnaire is filled by the researcher himself by asking questions from the
respondents, it is called "schedule". With the help of questionnaires, researchers can gather
genuine responses from the respondents, which enhance the effectiveness of data analysis.

3) Schedules :
Just like the questionnaire, a schedule is also a collection of questions. These questions are
separated through different sub headings, as per the research problem. Questions are placed
in a specific sequence, following the pattern of relevant topic. The researcher or the field
worker describes the questions to the individuals and records the responses. The major
difference between questionnaire and schedules that schedules are filled I by the field worker
or the enumerator specifically appointed for this purpose, whereas in questionnaire,
respondents fill the form. Enumerator explains the purpose of the research and data
collection to the respondents and collects their responses. By explaining the objective to the
participants, enumerators help in easy understanding of the research topic.

4) Observation :
Another technique for gathering primary data is observation. When the researcher records
information about a person, organisation, or situation, without making any personal contact,
it is known as "observation method". In this, the researcher or the field executive observes
the activity of the concerned person or organisation, to draw a pattern of behavior or
response to a particular incident. Sometimes, an artificial environment is created to collect
the actual responses of the participants..

5) Experimentation :
An important method to collect primary data is experimentation. In experimentation, the
causal relationship is determined and analysed between variables. Experimentation is
carried-out with the objective 10, study effect on a dependent variable by causing a change in
the independent variable. For example, a research can be conducted to analyse the influence
on learning due to guidelines and instructions in schools.

6) Other Methods :
Other methods for collection of data are described below :
i) Warranty Cards :
Warranty cards are generally used by the dealers of consumer durable to get the feedback of
products from their consumers. These are the postal sized cards placed within the package of
product. These cards contain various questions regarding the performance of product and to
know the needs of consumers. Customers are requested to fill and mail it back. It helps in
new product development for the manufacturer

ii) Auditing :
Auditing is a technique for assessing the performance and current position of any department
or the organisation. Sometimes, it is also used for understanding the market and buying
behavior of customers. Distributors or manufacturers use this tool for gaining the
competitive advantage and satisfying the need of customers. It is also used by the researchers
for inspecting the products. services or food purchased by consumers, also known as pantry
audit.

iii) Mechanical Devices :

In present time, there are a lot of electric and magnetic devices. present in the market for
leader the required information or the incident Sea devices may be very useful in collecting
hidden information. Some of the major mechanical devices psycho galvanometer, motion
picture camera, voice recorders, audiometer, etc.

iv) Simulation :
Simulation is a quantitative technique for data collection. It is the creation of an artificial
environment resembling a real life situation. This real life situation is simulated by using
various mathematical equations and variables. Researchers can determine the relation
between different variables by altering one of the variables and finding its effect on the
others.

Advantages of Primary Data

Primary data is significant in research due to following reasons :

1) Reliability :
As the primary data is collected originally by the researcher and it is current and accurate, it
is more reliable than secondary data.

2) Variety of Techniques :
Primary data can be collected through various techniques. There are numerous tools and
techniques available to record and analyse primary data such as interviews, questionnaires,
observation, audits, etc. It allows the researchers to explore effectively in almost every area
where research is possible.

3) Wide Coverage Including Special Cases :

Primary data is applicable in many areas. including some special cases. Sometimes.
researchers want information regarding particular cases for which previous literature is not
available. Collecting primary data is the only solution for these specific research problems or
issues. In these cases, primary data is the only source of information which can be trusted for
effective solution.

4) Complete Control over Process :

Sometimes, organisations ask the researchers to conduct the research in specific area rather
than in broader perspective. Collecting the primary data allows the researchers to collect the
data of their concern and represent it in ways that can benefit the organisations. Researchers
can also decide the length of study, location in which research is to be carried out, time
duration, etc., as per their requirement and convenience.

5) Cost Effective Collection :

The collection of primary data is cost-effective. Many times unnecessary time and money is
wasted in collecting secondary data, and the information proves to be useless. But in primary
data collection, the researcher concentrates his efforts on potential sources of data which
provide reliable information in optimal cost.

6) Sole Ownership of Information :

As the information processed from the primary data is fresh and original, it can be
copyrighted. This way, the researcher becomes the owner of that information. He/she can
take the benefit of information by sharing it with organisations. This is not so in the case of
secondary data, as it already belongs 10 other person or organisation.

Disadvantages of Primary Data

Primary data has following limitations :

1) Costly Affair :
Primary data collection is an expensive task. It involves different activities. like selecting
type of technique, preparing questions, and hiring trained professionals for collecting
information or observing targets, etc. In this process, a huge amount is spent, which is why it
is costly to conduct.

2) Time Consuming :
Collecting primary data effectively takes more time. Developing research plan, deciding
sources of information, and selecting the methods of data collection are time consuming
activities.

3) Infeasible Sometime :
Although, primary data considered to be reliable source of information, but, sometimes it is
not an easy task to collect the primary data, as the sources of information may not be in the
reach of researcher or may incur a huge amount of money.

4) Huge Quantity of Data :

Sometimes data collected through primary sources are in huge quantity. This large volume of
data leads confusion about the accuracy of the Information The processing and analysis of
the data becomes complex and cumbersome due to large size.

5) Unwillingness to Answer :
Sometimes participants do not cooperate in data collection by showing unwillingness to
answer or by giving wrong information. These factors act as burdies in primary data
collection and also reflect biasness in responses.
8. What do you mean by Secondary data? What are the methods of collecting primary
data? What are the advantages of collecting secondary data as compared to primary data?
Answer: Secondary data is the data that have been already collected for another purpose
but has some relevance to your research needs. In addition, the data is collected by
someone else instead of the researcher himself.

Secondary data is second-hand information. It is not used for the first time. That is why it
is called secondary.

Secondary data sources provide valuable interpretations and analysis based on primary
sources. They may explain in detail primary sources and often uses them to support a
specific thesis or a point of view.

Most common examples of secondary data sources are:

Previous research
Mass media products
Government reports
Official statistics
Letters
Diaries
Web information
Google Analytics or other sources that show statistics and data for digital customer
experience.
Historical data
Encyclopedias
Monographs
Journal articles
Biography
Research analysis
Dissertations
Works of criticism and interpretation
Financial sources such as profit and loss statements balance sheets, inventory records,
sales records and etc.
Advantages of Secondary Data:

Ease of Access
The secondary data sources are very easy to access. The internet world changed how
secondary research exists. Nowadays, you have so much information available just by
clicking with the mouse in front of the computer.
Low Cost or Free
The majority of secondary sources are absolutely free for use or at very low costs. It
saves not only your money but your efforts. In comparison with primary research where
you have to design and conduct a whole primary study process from the beginning,
secondary research allows you to gather data without having to put any money on the
table.
Time-saving
As the above advantage suggests, you can perform secondary research in no time.
Sometimes it is a matter of a few Google searches to find a credible source of
information.
Generating new insights and understandings from previous analysis
Reanalyzing old data can bring unexpected new understandings and points of view or
even new relevant conclusions.
Larger sample size
Big datasets often use a larger sample than those that can be gathered by primary data
collection. Larger samples mean that the final inference becomes much more
straightforward.
Longitudinal analysis
Secondary data allows you to perform a longitudinal analysis which means the studies
are performed spanning over a large period of time. This can help you to determine
different trends. In addition, you can find secondary data from many years back up to a
couple of hours ago. It allows you to compare data over time.
Anyone can collect the data
Secondary data research can be performed by people that aren’t familiar with the
different types of quantitative and qualitative research methods. Practically, anyone can
collect secondary data.
Disadvantages:
 Not specific to your needs
Here is the main difference with the primary method. Secondary data is not specific to
the researcher’s need due to the fact that it was collected in the past for another reason.
That is why the secondary data might be unreliable and unuseful and in many business
and marketing cases. Secondary data sources can give you a huge amount of information,
but quantity does not mean appropriateness.
Lack of control over data quality
You have no control over the data quality at all. In comparison, with primary methods
that are largely controlled by the data-driven marketer, secondary data might lack quality.
It means the quality of secondary data should be examined in detail since the source of
the information may be questionable. As you relying on secondary data for your
decision-making process, you must evaluate the reliability of the information by finding
out how the information was collected and analyzed.
Biasness
As the secondary data is collected by someone else than you, typically the data is biased
in favor of the person who gathered it. This might not cover your requirements as a
researcher or marketer.
Not timely
Secondary data is collected in the past which means it might be out-of-date. This issue
can be crucial in many different situations.
Not proprietary Information
Generally, secondary data is not collected specifically for your company. Instead, it is
available to many companies and people either for free or for a little fee. So this is not
exactly an “information advantage” for you and your competitors also have access to the
data.

9. What do you understand by Graphical Representation of Statistical Data? What are

various types of graphs? Explain with example.
Answers: Graphical Representation is a way of analysing numerical data. It exhibits the
relation between data, ideas, information and concepts in a diagram. It is easy to understand and
it is one of the most important learning strategies. It always depends on the type of information
in a particular domain. There are different types of graphical representation. Some of them are as
follows:

 Line Graphs – Line graph or the linear graph is used to display the continuous data and
it is useful for predicting future events over time.
 Bar Graphs – Bar Graph is used to display the category of data and it compares the data
using solid bars to represent the quantities.
 Histograms – The graph that uses bars to represent the frequency of numerical data that
are organised into intervals. Since all the intervals are equal and continuous, all the bars
have the same width.
 Line Plot – It shows the frequency of data on a given number line. ‘ x ‘ is placed above a
number line each time when that data occurs again.
 Frequency Table – The table shows the number of pieces of data that falls within the
given interval.
 Circle Graph – Also known as the pie chart that shows the relationships of the parts of
the whole. The circle is considered with 100% and the categories occupied is represented
with that specific percentage like 15%, 56%, etc.
 Stem and Leaf Plot – In the stem and leaf plot, the data are organised from least value to
the greatest value. The digits of the least place values from the leaves and the next place
value digit forms the stems.
 Box and Whisker Plot – The plot diagram summarises the data by dividing into four
parts. Box and whisker show the range (spread) and the middle ( median) of the data.
General Rules for Graphical Representation of Data
There are certain rules to effectively present the information in the graphical representation.
They are:
  Suitable Title: Make sure that the appropriate title is given to the graph which indicates
the subject of the presentation.
 Measurement Unit: Mention the measurement unit in the graph.
 Proper Scale: To represent the data in an accurate manner, choose a proper scale.
 Index: Index the appropriate colours, shades, lines, design in the graphs for better
understanding.
 Data Sources: Include the source of information wherever it is necessary at the bottom
of the graph.
 Keep it Simple: Construct a graph in an easy way that everyone can understand.
 Neat: Choose the correct size, fonts, colours etc in such a way that the graph should be a
visual aid for the presentation of information.

Graphical Representation in Maths

In Mathematics, a graph is defined as a chart with statistical data, which are represented in the
form of curves or lines drawn across the coordinate point plotted on its surface. It helps to study
the relationship between two variables where it helps to measure the change in the variable
amount with respect to another variable within a given interval of time. It helps to study the
series distribution and frequency distribution for a given problem. There are two types of graphs
to visually depict the information. They are:

 Time Series Graphs – Example: Line Graph

 Frequency Distribution Graphs – Example: Frequency Polygon Graph

Principles of Graphical Representation

Algebraic principles are applied to all types of graphical representation of data. In graphs, it is
represented using two lines called coordinate axes. The horizontal axis is denoted as the x-axis
and the vertical axis is denoted as the y-axis. The point at which two lines intersect is called an
origin ‘O’. Consider x-axis, the distance from the origin to the right side will take a positive
value and the distance from the origin to the left side will take a negative value. Similarly, for
the y-axis, the points above the origin will take a positive value, and the points below the origin
will a negative value.
Generally, the frequency distribution is represented in four methods, namely

 Histogram
 Smoothed frequency graph
 Pie diagram
 Cumulative or ogive frequency graph
 Frequency Polygon

Merits of Using Graphs

Some of the merits of using graphs are as follows:

 The graph is easily understood by everyone without any prior knowledge.

 It saves time
 It allows us to relate and compare the data for different time periods
 It is used in statistics to determine the mean, median and mode for different data, as well
as in the interpolation and the extrapolation of data.

Example for Frequency polygonGraph

Here are the steps to follow to find the frequency distribution of a frequency polygon and it is
represented in a graphical way.
  Obtain the frequency distribution and find the midpoints of each class interval.
 Represent the midpoints along x-axis and frequencies along the y-axis.
 Plot the points corresponding to the frequency at each midpoint.
 Join these points, using lines in order.
 To complete the polygon, join the point at each end immediately to the lower or higher
class marks on the x-axis.

10. Calculate :
i) Laspeyre’s Index number
ii) Paasche’s Index number
iii) Fisher’s Index Number
iv) Dorbish Bowley’s Index Number

Commodity Base Year Current Year

Po Qo P1 Q1
A 10 5 20 2
B 15 4 25 8
C 40 2 60 6
D 25 3 40 4

Answer: https://www.shaalaa.com/question-bank-solutions/calculate-laspeyre-s-paasche-s-
dorbish-bowley-s-and-marshall-edgeworth-s-price-index-numbers-construction-of-index-
numbers-weighted-aggregate-method_156587