CBSE Class 11 — Notes, Chapters & Practice Quizzes

Chapter 1: Introduction

Summary

Economics, in Alfred Marshall's words, studies people in the ordinary business of life — how they consume, produce and distribute goods and services for monetary gain. The starting point is a basic conflict: human wants are unlimited, but the resources that satisfy them are scarce and have alternative uses, so scarcity is the root of every economic problem and choice becomes unavoidable. A consumer buys goods, a producer makes them or provides services, a seller sells for profit, an employee works for wages and an employer hires others — all are gainfully engaged in economic activities. Economics is conventionally studied in three parts: consumption, production and distribution (how the national income or GDP is divided into wages, profits, rents and interest). To analyse problems such as poverty or disparity, economists need reliable facts expressed as numbers, called economic data. Statistics deals with the collection, organisation, presentation, analysis and interpretation of such numerical data. It lets an economist describe facts precisely (saying 310 people died is more convincing than saying hundreds did), condense huge masses of figures into summary measures like the mean or standard deviation, find and test relationships between factors such as price and demand, and predict future trends so policies can be framed. Data may be quantitative (output in tonnes) or qualitative (gender, literacy). Yet, as the story of the family that drowned in a river of average depth warns, statistical methods are no substitute for common sense.

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