Introduction

• (i) Statistics can only deal with quantitative data.
  False. While statistics deals primarily with quantitative data, qualitative data (like attributes: health, honesty) can also be statistically analyzed if they are converted into numbers (e.g., ranks or scores).
• (ii) Statistics solves economic problems.
  True. Statistics provides the necessary data and tools (like analysis of demand, supply, prices) to understand economic problems and find solutions.
• (iii) Statistics is of no use to Economics without data.
  True. Data is the raw material of statistics. Without data, no statistical analysis is possible, rendering it useless for economic study.

List of Activities in a Market Place:

1. A shopkeeper selling vegetables. (Economic)
2. A customer buying fruits. (Economic)
3. A beggar asking for alms. (Non-Economic)
4. A hawker shouting prices to attract customers. (Economic)
5. A person distributing free water (social service). (Non-Economic)
6. A laborer carrying heavy loads for money. (Economic)

Economic Activities: 4 out of 6.
Reason: Activities 1, 2, 4, and 6 involve monetary transactions or earning a livelihood, hence they are economic activities.

Statistics provides the quantitative foundation for policy formulation.
Example 1: Poverty Alleviation
The government collects data on the number of people living below the poverty line (BPL). Based on these statistics, policies like MNREGA or free ration schemes are formulated to target the affected population specifically. [Image of poverty line graph]

Example 2: Budget Preparation
The Finance Ministry uses statistical data on previous years’ revenue (taxes) and expenditure to estimate the budget for the next year. Policies regarding tax slabs or infrastructure spending are based entirely on these statistical projections.

This statement defines the fundamental economic problem of Scarcity. Resources are always scarce in relation to human wants.

Example 1 (Individual Level):
You have a pocket money of ₹500 (Limited Resource). You want to buy a movie ticket, eat a pizza, buy a book, and recharge your phone (Unlimited Wants). You cannot do all of them; you must choose which want to satisfy first.

Example 2 (National Level):
The government has a limited budget (Limited Resource). It wants to build roads, improve defense, provide free education, and subsidize healthcare (Unlimited Wants). It cannot fund everything fully and must allocate resources based on priority.

Wants are satisfied based on the scale of preference or priority.
Since resources are limited, a consumer (or an economy) ranks their wants in order of urgency or intensity.

• The most urgent want is satisfied first (e.g., food for a hungry person).
• Less urgent wants are postponed (e.g., buying a luxury watch).
• This involves making a Choice, which is the essence of economics.

The main reasons for studying Economics are:

• Understanding Scarcity: To learn how to manage limited resources efficiently to maximize satisfaction.
• Consumer Behaviour: To understand how rational decisions are made regarding spending money.
• Social Awareness: To understand major national issues like poverty, unemployment, and inflation and evaluate government policies critically.
• Decision Making: It equips us with the analytical tools to make better choices in daily life and business.

This statement is True. Statistics creates results based on data, but interpreting that data requires common sense. Blindly following statistical conclusions can lead to absurd results.

Example (The River Crossing):
A family wants to cross a river. The father calculates the average depth of the river as 3 feet. Since the average height of his family members is 4 feet, he concludes statistically that everyone can cross safely. However, the river might be 1 foot deep at the banks but 7 feet deep in the middle. Without common sense, the family could drown despite the “safe” average.

Conclusion: Statistics provides the tools, but common sense provides the wisdom to apply them correctly.