1.

Introduction
Consumer: One who buys goods and services.

Seller: One who sells goods to make a profit for himself.

Producer: One who produces goods (such as a farmer or a manufacturer)

Service-Holder: One who works for others and earns wages.

Service-Provider: One who provides some kind of service to others

What is Economics all about?

An economic problem arises, only due to scarcity of resources in relation to the demand for
them.

Human wants are unlimited and recurring in nature. But, the resources (land, labour, capital and
entrepreneurship) that satisfy our wants are limited in supply. Also, these resources can be put
to alternative uses. Now, the basic economic problem is to choose between alternative uses,
i.e., to choose those wants that should be satisfies now and those that can be satisfied later. In
short, the basic economic problem is the problem of choice.

For example, there are wants such as rice, wheat and houses. But, the land available to
produce all these goods is scarce. If the economy decides to produce rice, then no land will be
available for the production of wheat and houses. Now, a choice has to be made as to which
goods should be produced with the given amount of land. Thus, the economic problem is the
problem of choice.

Hence, Prof. Lionel Robbins defined economics as follows: “Economics is a science which
studies human behaviour as relationship between ends and scarce means that have alternative
uses.”

Some important parts of Economics are

1. Consumption: It is the part of Economics that analyses the choice of goods by consumers.

2. Production: It studies how a producer decides to choose what to produce. It analyses how the
cost of production and price of goods behave in the market.
3. Distribution: This part of Economics studies how the national income (sum of rent, wages,
interest and profit) is distributed among the various factors of production.

Statistics in Economics

Data are facts expressed numerically. In Economics, the purpose of collecting data is to
understand the economic problems in terms of the various causes behind them. For example,
when we analyse the hardships of poverty, we try to explain it in terms of the factors such as
unemployment, low productivity of people and backward technology.

With the help of statistical analysis, we are able to formulate measures that can mitigate
poverty. In Economics, such measures are known as policies.

Thus we understand that no analysis is possible without the data on various factors associated
with a problem. We can also understand that no policy measures can be formulated to solve the
problem. So, economic analysis is possible with the help of statistical data.