CHAPTER- 1 (MEANING,SCOPE, LIMITATIONS

AND IMPORTANCE OF STATISTICS)

Meaning of statistics :-
 Statistics, the science of collecting, analyzing, presenting,
and interpreting data.

 Statistics is concerned with scientific methods for collecting, organising,

summarising, presenting and analysing data as well as deriving valid
conclusions and making reasonable decisions on the basis of this
analysis. Statistics is concerned with the systematic collection of
numerical data and its interpretation. The word ‘ statistic’ is used to
refer to ▪ Numerical facts, such as the number of people living in
particular area. ▪ The study of ways of collecting, analysing and
interpreting the facts.

Sense of economics
Singular sense It deals with the collection of data, their classification,
analysis and interpretations of statistical data. Therefore, it is described as a
branch of science which deals with classification.

Plural senseIn the plural sense, it refers to the numerical facts

and figures systematically collected for some special purpose.

Singular Sense:
In a singular sense, it means the science of counting or science of average.
This definition has the following features:

 Collection of data:
Most of the statistical analysis is performed on the basis of collected data.
The methods of data collection like primary and secondary, census and
sampling, etc. are related to data collection.
 Organization of data:
After collecting data, a systematic arrangement is essential. They are
organized and presented in the table on the basis of rows and columns. This
process is known as a presentation of data.

 Analysis of data:
The organized data presented need to be analyzed. There are various tools
of analysis in statistics like average, co-relation, regression, dispersion, etc.

 Interpretation of data:
After analysis, results are interpreted and conclusions are drawn. IT is the
last and most essential part of the work. If findings are interpreted wrongly,
the wrong conclusion is obtained.

Plural Sense:
In the plural sense, it refers to the numerical facts and figures systematically
collected for some special purpose. This definition has the following features:

 Statistics are aggregate of facts:

In statistics, the single numerical figure has no meaning. It is not statistics.
The numerical figures of production, income, price of commodities, students
of the class, etc. are statistics.

 The values of statistics are numerically expressed:

The values of statistics are countable as well as numerically expressed. For
example, the numbers of students at Siddhartha College in grade 11 are 400.
Among them 264 are female and 136 are male, which constitute statistics.

 Statistics are collected in a systematic manner:

Firstly, we have to think about the field of study. Then, data should be
collected by applying suitable methods and work should be carried out in a
systematic manner. Otherwise, interpretation and conclusion may be wrong
or misleading.

 Statistics are collected for a pre-determined purpose:

We must have a well-defined purpose, specific aims, and objectives before
we collect data. Suppose, if we want to compare the performance of students
in grade XI in Siddhartha College in one subject or more, we must specify the
subject and the year, for which comparison is carried out.

 Statistics makes easy to comparison:

The collected numerical data constitute statistics if they are comparable. To
make a valid comparison, the data should be homogeneous. For example,
the passed number of students of Siddhartha College and other College
constitute statistics, as they are comparable. But the weight of the students
and their intelligence do not constitute statistics as they are not comparable.

Functions of statistics
1. To Present Facts in Definite Form:
We can represent the things in their true form with the help of figures.
Without a statistical study, our ideas would be vague and indefinite.
The facts are to be given in a definite form. If the results are given in
numbers, then they are more convincing than if the results are expressed on
the basis of quality.
Example
The statements like, there is lot of unemployment in India or population is
increasing at a faster rate are not in the definite form. The statements should
be in definite form like the population in 2004 would be 15% more as
compared to 1990.

 2. Precision to the Facts:

The statistics are presented in a definite form so they also help in
condensing the data into important figures. So statistical methods
present meaningful information. In other words statistics helps in
simplifying complex data to simple-to make them understandable.
The data may be presented in the form of a graph, diagram or through an
average, or coefficients etc. For example, we cannot know the price position
from individual prices of all good, but we can know it, if we get the index of
general level of prices.

 3. Comparisons:

After simplifying the data, it can be correlated as well as compared. The

relationship between the two groups is best represented by certain
mathematical quantities like average or coefficients etc. Comparison is
one of the main functions of statistics as the absolute figures convey a
very less meaning.

 4. Formulation and Testing of Hypothesis:


These statistical methods help us in formulating and testing the
hypothesis or a new theory. With the help of statistical techniques, we
can know the effect of imposing tax on the exports of tea on the
consumption of tea in other countries. The other example could be to
study whether credit squeeze is effective in checking inflation or not.
 5. Forecasting:

Statistics can also predicts the future course of action of the
phenomena. We can make future policies on the basis of estimates
made with the help of Statistics. We can predict the demand for goods
in 2005 if we know the population in 2004 on the basis of growth rate
of population in past. Similarly a businessman can exploit the market
situation in a successful manner if he knows about the trends in the
market. The statistics help in shaping future policies.

 6. To Measure Uncertainty:
Future is uncertain, but statistics help the various authorities in all the phenomenon of
the world to make correct estimation by taking and analyzing the various data of the
part. So the uncertainty could be decreased. As we have to make a forecast we have
also to create trend behaviors of the past, for which we use techniques like regression,
interpolation and time series analysis.

7. Enlarging Individual Knowledge and Experience : An

individual can widen their horizon using statistics while going through
different procedures of statistics. Statistics also enlarge the thinking
and reasoning power of an individual and ultimately help them reach
a rational conclusion.

Limitation of Statistics
1. Ignores the Qualitative Aspect: Statistics does not consider aspects that can not be
expressed in quantitative terms. One has to convert the qualitative aspects like
kindness, honesty, care, health, intelligence, etc., into quantitative terms to study.

2. Does not Deal with Individual Terms: As the definition of statistics suggests, it only
deals with the aggregate of facts and does not consider individual items. For example, it
does not consider the marks of one student but will consider the marks of a class.

3. Requires only Uniform and Homogeneous Data: An economist can not perform a
statistical study if the data gathered is not homogeneous.

4. Can Be Misused: If the methods of statistics are not used by an expert, trained,
specialized, and unbiased person, there are huge chances of misuse and inaccurate
results. A biased individual can transform the data according to their needs and purpose
 5. Results are True only on Average: In statistics, a result is true only on average. It
means that if we say that the average mark of a class of 50 students is 60, it does not
mean that every student has the same marks. One student might have 30 or 40 marks..

Importance of Statistics
To Government
 Statistics helps the government of a country fulfill different
objectives by letting them collect, organize, present,
analyze, and interpret a piece of large information in
numerical figures. With this, the government can efficiently
run the economy and fulfill welfare and other objectives.
 The government of a country can also formulate various
economic policies by using statistical methods like index
numbers, forecasting and demand analysis, time-series
analysis, and many more.
 In democratic countries like India, different political groups
take the help of statistics to know about their popularity
among the masses.
In Economics
 Statistics help in formulating different economic laws such
as the Law of Demand, Law of Supply, Elasticity of
Demand, Elasticity of Supply , etc., were developed using
the inductive method of generalization.
 An economy faces different economic problems such
as unemployment, poverty, etc. Statistics, with the help of
different techniques and tools, help an economy
understand and solve these economic problems efficiently.
 An economy includes different market structures such
as perfect competition, monopoly, oligopoly market, etc.
For better results and functioning, the study of these
market structures is essential. Statistics help in the study
through the comparison of the cost, profits, and prices of
the firms.
 An economist can also estimate a mathematical
relationship between the different variables of economics.
 Ultimately, statistics helps study the behavior of different
concepts of economics. For example, the laws of supply
 and demand are used to understand the behavior of
consumers toward the purchase and usage of a commodity
or service by considering different determinants of supply
and demand.
In Business
 Statistics provide different guidelines and tools to know the
feasibility, location, inputs availability, taxes, size of output,
turnover, market size, etc., before establishing a business.
 A businessman can estimate the demand for their service
or product with the help of different statistical methods
such as trend analysis, etc.
 Statistics also help a business in the production planning
process to ensure a proper balance between the supply and
demand for a good or service offered by the firm.
 Different statistical techniques help a business in the
analysis of purchasing power, consumer wants, pricing,
population, etc., to understand the potential of the target
market for its service or product.

IMPORTANT QUESTIONS
Q- FUNCTIONS OF STATISTICS ?
Q- LIMITATIONS OF STATISTICS?
Q-FEATURES OF STATISTICS IN PLURAL SENSE?

Links for the analysis of our learning

https://www.evidyarthi.in/cbse/classxi/ec
onomics-11/mcq-introduction-chapter-1-
class-11-economics-i
https://www.evidyarthi.in/cbse/classxi/
economics-11/mcq-introduction-chapter-1-
class-11-economics-ii