11th Economics Textbook PDF

Maharashtra State Bureau of Textbook Production and Curriculum Research, Pune. The Coordination Committee formed by GR No. Abhyas - 2116/(Pra.Kra.43/16) SD - 4 Dated 25.4.2016 has given approval to prescribe this textbook in its meeting held on 20.06.2019 and it has been decided to imple...

Maharashtra State Bureau of Textbook Production and Curriculum Research, Pune. The Coordination Committee formed by GR No. Abhyas - 2116/(Pra.Kra.43/16) SD - 4 Dated 25.4.2016 has given approval to prescribe this textbook in its meeting held on 20.06.2019 and it has been decided to implement it from academic year 2019-20. ECONOMICS STANDARD ELEVEN 2019 Maharashtra State Bureau of Textbook Production and Curriculum Research, Pune. Download DIKSHA App on your smartphone. If you scan the Q.R.Code on this page of your textbook, you will be able to access full text. If you scan the Q.R.Code provided, you will be able to access audio-visual study material relevant to each lesson, provided as teaching and learning aids. First Edition : © Maharashtra State Bureau of Textbook Production and Curriculum Research, Pune - 411 004. 2019 The Maharashtra State Bureau of Textbook Production and Curriculum First Reprint : Research reserves all rights relating to the book. No part of this book 2020 should be reproduced without the written permission of the Director, Maharashtra State Bureau of Textbook Production and Curriculum Research, ‘Balbharati’, Senapati Bapat Marg, Pune 411004. Economics Subject Committee: Illustrations : Shri Bhatu Ramdas Bagale Dr. Manjusha Musmade (Chairperson), Pune Cover : Mrs.Anagha Inamdar Mrs. Sunita Sunil Kamte, Mumbai Cartography : Shri Ravikiran Jadhav Shri Rajendra Fakir Wekhande, Thane Translation Coordination : Shri Ankesh Lalitprasad Sahu, Nagpur Shri Ravikiran Jadhav Mrs. Shital Sampat Nimase, Ahmednagar Special Officer (Economics) Miss. Archana Shriniwas, Mumbai Typesetting : DTP Section, Textbook Shri Ravikiran Jadhav, Member-Secretary Bureau, Pune Paper : 70 GSM Cream wove Print Order : Economics Study Group: Shri Subhash Rajdhar Patil, Printer : Jalgaon Mrs. Usha Bhaskar Kale, Kolhapur Mrs. Shobha Subhash Nagare, Nashik Production : Mrs. Swati Milind Wagh, Mumbai Shri Sachchitanand Aphale Shri Raghunath Narayan Patil, Chief Production Officer Kolhapur Shri Liladhar Atram, Production Officer Shri Sharadkumar Uttam Shete, Sindhudurg Mrs. Vandana Dilip Patil, Pune Mrs. Kavita Vilas Pol, Kolhapur Dr. Sudhakar Ramkrishna Kute, Publisher : Aurangabad Shri Kashiram Parshuram Shri Vivek Uttam Gosavi, Bawisane, Buldhana Controller Maharashtra State Textbook Bureau, Prabhadevi, Mumbai - 400 025 Chief Coordinatior : Mrs. Prachi Ravindra Sathe  The Constitution of India Preamble WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens: JUSTICE, social, economic and political; LIBERTY of thought, expression, belief, faith and worship; EQUALITY of status and    of opportunity; and to promote among them all FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation; IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day of November, 1949, do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION. NATIONAL ANTHEM  Preface Dear Students, We welcome you all to Std. XI. For the first time, you are being introduced to the subject of Economics as a separate discipline. You have already been acquainted with some of the concepts of Economics from Std. V onwards, especially in the subjects of Geography and Mathematics. This textbook aims to create awareness about the dynamic changes taking place in Indian economy. The National Curriculum Framework (NCF) was formulated in 2005, followed by the State Curriculum Framework (SCF) in 2010. Based on the given two frameworks, restructuring of the curriculum and preparation of a revised syllabus has been undertaken which will be introduced from the academic year 2019-20. The textbook incorporating the revised syllabus has been prepared and designed by the Maharashtra State Bureau of Textbook Production and Curriculum Research, (Balbharati), Pune. The textbook introduces ‘Economics’ as an independent subject for the students of Std. XI. This will enable the students to understand various economic concepts thoroughly and correlate them with their practical life. The new syllabus focusses on realistic approaches to solve real world problems. Economic concepts such as money, economic growth, economic development, economic reforms, economic planning, statistics etc, have been discussed in detail. Besides this, the textbook also throws light upon various challenges before Indian economy. General teaching-learning objectives of the revised syllabus are determined on the basis of the ‘principle of constructivism’. The curriculum and syllabus conforms to the maxims of teaching such as moving from concrete to abstract, known to unknown and from part to whole. For the first time, in the syllabus of Economics various activities have been introduced. These activities will not only help to develop the content knowledge but also provide scope for gaining relevant and additional knowledge. QR Code has also been introduced to facilitate e-learning. Besides this, ample scope has been provided for activity based learning, group learning, group discussions and self- learning processes. No compromise is made in any manner over the use of language in the economic context, but at the same time, the textbook is presented in a very simple and lucid language too. Relevant diagrams, graphs, tables used in the textbook will bring about more clarity in the understanding of various terminologies and economic concepts. Glossary of economic terms and difficult words are also provided towards the end of the textbook. The efforts taken to prepare the textbook will not only enrich the learning experiences of the students, but also benefit other stakeholders such as teachers, parents as well as candidates appearing for the competitive examinations. We look forward to a positive response from the teachers and students. Our best wishes to all! (Dr. Sunil Magar) Director Pune Maharashtra State Bureau of Date : 20 June 2019 Textbook Production and Indian Solar Date : 30 Jyestha 1941 Curriculum Research, Pune  CLASS 11 ECONOMICS Competence Statement Differentiate between Natural Sciences and Social Sciences Recognize and appreciate the diversity of views of various Economists Analyze the various definitions of Economics Differentiate between micro economics and macro economics Explain the basic concepts of micro economics and macro economics with realistic examples Explain the difficulties of barter system and justify the introduction of money Explain the various definitions of money Explain the different stages in the evolution of money Describe the qualities of money Explain the primary, secondary and contingent functions of money Review measures to counter the problem of black money Explain the meaning of Median, Quartiles, Deciles and Percentiles Explain the need for partition values and assess its superiority over averages Explain the use of partition values in economic data analysis Apply their quantitative skills to derive quartiles, deciles and percentiles for individual series, ungrouped and grouped data Explain the structure of the economy of Maharashtra Compare the features of Maharashtra economy with that of other states Assess the performances of various sectors and their contribution to the state’s economic development Explain the problems of agricultural, industrial and service sectors in the State Review recent policy measures undertaken by the Government of Maharashtra Explain the meaning, definition and significance of rural development Explain the classification of agricultural credit on the basis of purpose and tenure Differentiate between institutional and non-institutional sources of credit Assess the role of various agricultural finance institutions Explain the stages of population growth based on various census data Explain the factors responsible for population explosion in India Assess various policy measures to check population explosion Explain the importance of human development Define the concept of unemployment Explain the types of rural and urban unemployment Explain the major causes of unemployment in India Assess the various employment generation programmes Explain multi-dimensional poverty Differentiate between Absolute and Relative poverty Explain Poverty line and its objectives Explain rural poverty and urban poverty Review the estimates of poverty Explain the major causes of poverty Assess the various poverty alleviation measures Explain the objectives of the economic policy of 1991 Explain the terms liberalization, privatization and globalization Explain the measures undertaken for liberalization, privatization and globalization Evaluate the economic policy of 1991 Explain the meaning and definitions of economic planning Explain the features of economic planning Assess the targets and achievements of various five year plans Analyze the targets of the twelfth plan Explain the functions of NITI Aayog Compare the framework of the Planning Commission with that of NITI Aayog  - For Teachers - Dear Teachers, related to trends and patterns. Efforts have   We are happy to introduce the revised been made to provide the latest data available. textbook of Economics for Std. XI. This book Teachers must explain to the students the is a sincere attempt to follow the maxims of importance of data collection and data teaching as well as develop a ‘constructivist’ analysis. approach to enhance the quality of learning. P Major concepts of economics have a scientific Demand for more activity based, experiential base and they deal with abstractions. Encourage and innovative learning opportunities is the group work, learning through each other’s need of the hour. The present curriculum has help etc. Facilitate peer learning as much as been restructured so as to bridge the credibility possible by reorganizing the class structure gap that exists between what is taught and frequently. what students learn from direct experience in P Teaching-learning interactions, processes and the outside world. Guidelines provided below participation of all students are very necessary will help to enrich the teaching-learning and so is your active guidance. process and achieve the desired learning P Do not use the boxes titled ‘Do you know?’ outcomes. for evaluation. However, teachers must ensure P To begin with, get familiar with the textbook that students read this extra information. yourself. P Information provided in boxes with the title P The present book has been prepared for ‘You Should Know’ should be considered for constructivist and activity-based teaching. evaluation. P Teachers must skillfully plan and organize the P Exercises provided after each unit are prepared activities provided in each chapter to develop using different parameters such as observation, interest as well as to stimulate the thought co-relation, critical thinking, analytical process among the students. reasoning etc. Evaluation pattern should be P Always teach with proper planning. based on the given parameters. Equal P Use teaching aids as required for the proper weightage should be assigned to all the topics. understanding of the subject. Use different combinations of questions. P Follow the tentative number of periods Stereotype questions should be avoided. mentioned in the page of 'Contents' to give due P Use QR Code given in the textbook. Keep justice to the topic. checking the QR Code for updated information. P Follow the order of the chapters strictly as P Certain important links, websites have been listed in the contents because the units are given for references. Teachers as well as the introduced in a graded manner to facilitate students can use these references for extra knowledge building. reading and in-depth understanding of the P Statistics is placed as the third unit to facilitate subject. integrative learning through interdisciplinary P Economic terms included in the Glossary are approach. Application of statistical knowledge highlighted in blue colour in each chapter. will help students to understand the complex P List of abbreviations is provided towards the nature of various problems faced by Indian end of the textbook for further clarification. economy in the latter chapters. Best wishes for a wonderful teaching P Ask questions on statistical information experience!  Contents Tentative number Sr. No. Name of the Chapter Page No. of periods 1. BASIC CONCEPTS IN ECONOMICS 1-8 14 2. MONEY 9 - 13 10 3. PARTITION VALUES 14 - 23 16 4. THE ECONOMY OF MAHARASHTRA 24 - 30 14 5. RURAL DEVELOPMENT IN INDIA 31 - 35 10 6. POPULATION IN INDIA 36 - 42 14 7. UNEMPLOYMENT IN INDIA 43 - 49 14 8. POVERTY IN INDIA 50 - 56 14 9. ECONOMIC POLICY OF INDIA SINCE 1991 57 - 63 14 10. ECONOMIC PLANNING IN INDIA 64 - 69 10 GLOSSARY OF ECONOMIC TERMS -- LIST OF ABBREVIATIONS 70 - 80 130 REFERENCES, IMPORTANT WEBSITES/LINKS S.O.I. Note : The following foot notes are applicable : (1) © Government of India, Copyright : 2019. (2) The responsibility for the correctness of internal details rests with the publisher. (3) The territorial waters of India extend into the sea to a distance of twelve nautical miles measured from the appropriate base line. (4) The administrative headquarters of Chandigarh, Haryana and Punjab are at Chandigarh. (5) The interstate boundaries amongst Arunachal Pradesh, Assam and Meghalaya shown on this map are as interpreted from the “North-Eastern Areas (Reorganisation) Act. 1971,” but have yet to be verified. (6) The external boundaries and coastlines of India agree with the Record/Master Copy certified by Survey of India. (7) The state boundaries between Uttarakhand & Uttar Pradesh, Bihar & Jharkhand and Chattisgarh & Madhya Pradesh have not been verified by the Governments concerned. (8) The spellings of names in this map, have been taken from various sources. DISCLAIMER Note : All attempts have been made to contact copy right/s (©) but we have not heard from them. We will be pleased to acknowledge the copy right holder (s) in our next edition if we learn from them. Front Page : Students of standard ten have now come to standard eleven. They are going to study 'Economics' as an independent subject. The front cover is a visual presentation on the importance of Economics across all age groups. Visual images in this, represent the hierarchy of economic needs as per the age groups. Back Page : Various economic activities.  CHAPTER - 1 : BASIC CONCEPTS IN ECONOMICS Introduction : Types of Economic Systems - Capitalism, Today’s world is marked by scientific Socialism and Mixed Economy. inventions and discoveries. This remarkable scientific progress enables to probe into the Kautilya's Views on Economics : question, What is a science? Science is the Artha means 'Wealth' and systematic body of knowledge. There are two Shastra means 'Science'. main types of sciences. Arthashastra implies the Natural sciences   Social sciences science of acquiring and Natural science is one whose laws are managing wealth. Essentially, universally acceptable and their validity can be Arthashastra is a treatise tested in a laboratory under controlled conditions. Fig 1.1 on Political Economy in its Natural sciences are also called exact sciences Kautilya   broadest sense. because of their empirical approach to the study. e.g. Mathematics, Physics, Chemistry. Key-points based on Kautilya's views : Social Science is called abstract or 1) Crucial role of the state or government. behavioural science because it is related to 2) Focus on creation of wealth as the means to the study of some or the other aspect of human ensure welfare of the state. behaviour. e.g. Psychology is related to ‘mental’ 3) Need for efficient administrative machinery aspect of human behaviour. Sociology is related for good governance. to the study of ‘social’ aspect of man as a 4) Compilation of political ideas into member of society. Human behaviour can neither be empirically tested nor can be studied in the Arthashastra. laboratory. Hence, the laws of social sciences Do you know? are not universal but they are only statements of general human tendencies. Kautilya was a great statesman, philosopher, economist and royal advisor Meaning of Economics : during the Mourya period. He is also known Economics is a social science. The origin by the name Chanakya or Vishnugupta. of the term 'Economics' lies in the Greek word, Kautilya authored the ancient Indian 'Oikonomia' which means management of the political treatise, the 'Arthashastra'. household. Economics is referred to as 'Queen of Definitions of Economics : Social Sciences' by Paul Samuelson. Economics 1) Adam Smith's Wealth-Oriented Definition deals with the economic aspect of human behaviour. It deals with how human beings of Economics : satisfy unlimited wants with limited means. Classical economist Adam Let us understand the nature of Economics Smith, also regarded as the with respect to some popular definitions. "Father of Economics", has given the wealth-oriented Refresh your memory : definition of Economics. Have you studied the following concepts Out of his many literary in the previous textbooks? Fig 1.2 contributions to Economics, he Adam Smith 1 is most famous for his 1776 piece of work, "An 3) Lionel Robbins' Scarcity-Oriented Inquiry into the Nature and Causes of Wealth of Definition of Economics : Nations". Adam Smith defines Economics as "a This is the most popular science of wealth". definition of Economics. Key-points of Adam Smith's definition : Robbins, in his book 1) Laissez faire i.e. non-intervention of the entitled, "An Essay on the government. Nature and Significance Fig 1.4 of Economic Science" 2) Capital and wealth accumulation Lionel Robbins published in 1932 mentions 3) Nature's law in economic affairs. about the scarcity-oriented definition of 4) Division of labour as an aspect of growth Economics. theory. "Economics is a science which studies Do you know? human behaviour as a relationship between ends and scarce means which have alternative uses". Paul Romer and William Nordhaus have won Nobel Memorial Prize in Economics Key-points of Robbins' definition : for 2018. Paul Romer tends to be described 1) Wants (ends) are unlimited. as a growth theorist whereas Mr. Nordhaus 2) Means are comparatively limited. has remarkably contributed to the field of 3) Wants are gradable on the basis of priority. Environmental Economics. 4) Means have alternative uses. Find out : Do you know? Other Nobel Prize winners in Economics. Names of the Thought Economists 2) Prof. Alfred Marshall's Welfare-Oriented Classical School Adam Smith, Definition of Economics : of Thought of 18th David Ricardo, Neo-classical economist century J. S. Mill, Prof. Alfred Marshall has T. R. Malthus etc. given the welfare-oriented Neo-classical Alfred Marshall, definition of Economics, in School of Thought A. C. Pigou, the book entitled "Principles of 19th and 1st half Irving Fisher etc. of 20th century of Economics" which was Fig 1.3 published in 1890. His Modern School of J. M. Keynes, Alfred Marshall Thought from 20th Lionel Robbins, definition states : century till date. Paul Samuelson etc. "Economics is a study of mankind in the ordinary business of life. It examines that part Branches of Economics : of individual and social action, which is closely In 1933, Sir Ragnar Frisch coined the terms connected with the attainment and use of Micro Economics and Macro Economics. These material requisites of well-being". terms are derived from the Greek words 'Mikros' Key-points of Marshall's definition : and 'Makros' respectively. 1) Study of an ordinary man. A) Micro Economics : 2) Economics is a behavioural science. Micro means small. Micro Economics deals 3) Study of material welfare. with the behaviour of the individual variables 4) Economics is not simply a study of wealth. such as a household, worker, firm, industry etc. 2 Kenneth Boulding's Definition of Micro a) Economics : b) "Micro Economics is the study of particular firms, particular households, individual prices, wages, incomes, individual industries, particular commodities". Basic Concepts of Micro Economics 1) Want : It is difficult to define 'want' in few c) words. In common language, want can be referred to as a need. In economics, want denotes a feeling of 'lack of satisfaction'. This feeling enables the individual to satisfy his want. Human wants have grown in number for two basic reasons : Desire for better living due to inventions and Fig. 1.5 : Age and Wants - a, b, c innovations. Rise in population. iii) Wants differ with age : Wants and their satisfaction differ as per the chronological Characteristics of wants : age. (Fig. 1.5 a, b, c). i) Wants are unlimited : Wants not only arise again and again but they are also unending. iv) Wants differ with gender : Men and If one want gets satisfied, another arises. women want different goods according to Wants go on multiplying in number. their needs. ii) Wants are recurring in nature : Several v) Wants differ due to preferences : Individual human wants occur again and again, while habits, tastes and preferences matter a lot some might be only occasional. while deciding wants of the people. Fig. 1.6 : Seasons and Wants 3  vi) Wants differ with seasons : Wants keep on human wants or want satisfying power of a changing with seasons (Fig.1.6). commodity is called utility. vii) Wants differ due to culture : Differences 4) Value : Value has two approaches in in culture influence wants that are related to economics, i.e. 'value-in-use' and 'value in food, dressing styles etc. exchange'. Classification of Wants : Value-in-use : It refers to the worth of a Wants can be classified in the following ways. commodity. In simple words, it is usefulness i) Economic and Non-economic wants : of a commodity, e.g. no one has to pay Economic wants are those where monetary price for sunshine but its immense worth transaction is involved. An individual has for life can never be doubted. In economic to pay the price for them, e.g. food, language, sunshine has a high value-in-use. medicines etc. It is an example of 'free good'. Non-economic wants are those which can Value-in-exchange : It refers to the worth be satisfied without making monetary of a commodity or a service expressed in payment for them, e.g. air, sun shine etc. terms of another commodity. When this ii) Individual Wants and Collective wants : value is expressed in terms of money, it is Personal or individual wants refer to those called price of a commodity. A good which wants which are satisfied at the individual commands a price is termed as an 'economic level, e.g. a doctor using a stethoscope, a good', e.g. TV, car etc. judge wearing his coat. Water-Diamond Paradox of values : Some Collective wants are social wants where commodities have a high value-in-use there is collective satisfaction of wants, e.g. but low exchange value, e.g. water whereas travelling by train. some commodities have low value-in-use iii) Necessities, Comforts and Luxuries : but high exchange value due to its scarcity, Necessities are the very basic needs of e.g. diamond (Fig 1.7). life, e.g. food, clothing, shelter, health and education. Comforts are those wants which make our life comfortable, e.g. washing machine, mixer, pressure cooker etc. Luxuries are those wants which are meant for pleasure and enjoyment, e.g. AC-car, well-furnished house etc. Fig. 1.7 : Water-Diamond Paradox 2) Goods and Services : These are popular terms of economics. Find out : Anything that satisfies human wants is Which of the following is 'free good' or termed as a 'good'. It has material existence, 'economic good'? e.g. chalk used by a teacher. Water in river Services also satisfy human wants but do not Oxygen cylinder have any material existence, e.g. 'Teaching' Sunshine offered by the teacher. Water processed for drinking 3) Utility : Capacity of a commodity to satisfy Air 4 5) Wealth : Wealth refers to “anything which has 6) Personal Income : Earnings received by a market value and can be exchanged for money.” person from all sources is called his personal To be regarded as 'wealth', a commodity income. must possess the following characteristics : 7) Personal Disposable Income (PDI) : It is i) Utility that part of personal income which is left over ii) Scarcity after payment of direct taxes such as income iii) Transferability tax, wealth tax etc. iv) Externality You should know : i) Utility : A commodity must have the capacity to satisfy human wants, e.g. furniture, Following are the various types of income. refrigerator etc. A) Fixed income : Income which remains ii) Scarcity : A commodity must be scarce in stable over a period of time, e.g. rent, supply in relation to its demand if it is to wages. be included in the term ‘Wealth’, e.g. all B) Fluctuating income : Income which economic goods for which price is paid. is not fixed but keeps on changing, e.g. iii) Transferability : A commodity should be profit. It can be positive, negative or zero. transferable from person to person as well C) Money income : It is the income received as place to place. If the good is material or in actual currency of the country. In other tangible then only it is possible to transfer words, it is the income in cash, e.g. ` 5,000 it from place to place, e.g. vehicle, jewellery etc. D) Real income : It is the purchasing power of money income, e.g. commodities iv) Externality : A good can be transferred purchased out of money income. only if it is external to human body, e.g. bag, chair etc. E) Contractual income : This income is paid as per the terms and conditions of Do you know? contract, e.g. rent, wages. Physical transferability - This is actual F) Residual income : Income which is left transfer of goods from one person to another over after making payments to all factors and from one place to another, e.g. vehicle. of production is called residual income, Notional Transferability - It is not possible e.g. profit to transfer the good physically but there can be only transfer of ownership rights, e.g. land G) Earned income : Income obtained after participating in the productive activity, Try this : e.g. rent, wages, interest, profit. Prepare a list of commodities which satisfy H) Unearned income : Income received the condition of physical transferability and from all sources without indulging in any notional transferability. productive activity, e.g. windfall gains, lottery prizes. Do you know? Inborn qualities like beauty, melodious 8) Economic activity : Economic activities voice, efficiency etc. are not ‘wealth’ in the can be classified into four types which strict sense of economics. They are neither include production, distribution, exchange and external nor transferable. consumption. 5  of production which earns the reward in the form of ‘interest’, e.g. machinery, technology, factory building etc. iv) Entrepreneur : Entrepreneur is the organizer who is a real captain of the industry. He is a special kind of labour who gets the work done to earn the reward of ‘profit’ in the process of production. b) Distribution : It is division of factor rewards among different segments of the society. Factors of production claim their Fig. 1.8 : Economic Activities rewards of rent, wages, interest and profit a) Production : Production is creation of utility. through the process of distribution. There are four factors of production such as c) Exchange : It is give and take between land, labour, capital and entrepreneur. various units in the economy. ‘Exchange’ refers to sale and purchase of goods Always remember : and services. In economics, exchange is The activities which are carried out just necessarily a monetary transaction. for the sake of charity, hobby or in general, where there is no monetary exchange are d) Consumption : It is making use of goods considered ‘unproductive’ in the sense of and services to satisfy human wants. Economics, though they may be adding B) Macro-Economics : immense value to life. Macro means large or aggregate or total. Macro-Economics is therefore the study of Factors of production : aggregates covering the entire economy such i) Land : ‘Land’ in Economics is a wide as total employment, national income, national term. It is a natural factor of production. output, total investment, total savings, total Any natural resource that is available on, consumption, aggregate supply, aggregate above and below the surface of the earth is demand, general price level etc. called ‘land’ in Economics, e.g. minerals which are found below the surface of the Kenneth Boulding's definition of Macro earth; soil, water on the surface of the earth; Economics : air, sunshine, wind are above the surface of "Macro Economics deals not with the earth. Land earns ‘rent’ in productive individual quantities as such, but with the activity. aggregates of these quantities, not with the individual incomes but with the national income, ii) Labour : Labour is a human factor of not with individual prices but with the general production. Any physical or mental effort price level, not with individual output but with undergone during the process of production the national output". to earn the reward of 'wages' is called ‘labour’, e.g. carpenter, accountant, Basic Concepts of Macro Economics : engineer etc. 1) National Income : This reveals the total iii) Capital : Capital is a produced means for economic performance of a nation. It is further production. It is a man-made factor referred to as the total income of a country. 6  In the economic sense, national income is the Find out : aggregate monetary value of all final goods and Which of the following terms is a part of services produced in an economy during a year. micro economics or macro economics? Definition by National Income Committee : Global poverty “A national estimate measures the volume Price of a commodity of commodities and services turned out during a Balance of payments given period counted without duplication”. Profits of a firm National income 2) Saving : It is that part of the income which is set aside to satisfy the future needs by foregoing current consumption. In other words, saving is Always Remember that part of income which is not spent currently Economic Economic on consumption. Growth Development 3) Investment : It refers to creation of capital 1) Economic 1) Economic assets through mobilisation of savings, e.g. growth means development indicates machinery, equipment etc. an increase in economic growth plus the real national progressive changes 4) Trade Cycles : Trade cycles are fluctuations income of the in certain important in business. They are ups and downs in the country. variables which overall economic activities. Ups and downs determine well-being means fluctuations caused by inflation and of the people. depression respectively. 2) This concept 2) This concept Inflation is a continuous rise in general is narrow and is broader and price level. quantitative. qualitative. 3) Economic 3) Economic Depression is a continuous fall in overall growth is development is not prices and lowering down of economic possible without possible without activity in general. economic economic growth. development. Do you know ? 4) Economic 4) Economic Unemployment created due to impact growth is a development is a of cyclical fluctuations is called ‘Cyclical unidimensional multi-dimensional Unemployment’. concept. concept. 5) Economic 5) Economic 5) Economic Growth : The term economic growth is development is growth has a 'quantitative' dimension. In simple spontaneous and deliberate and words, economic growth means an increase in reversible. irreversible. the real national income of the country, over a 6) Economic 6) Economic long period of time. growth is development is 6) Economic Development : This is a wider measured measured in terms concept which has a 'qualitative' dimension. in terms of of agricultural national income productivity, industrial Economic development implies economic and per capita productivity quality of growth plus progressive changes in certain income. human life etc. important variables which determine well-being of the people, e.g. education, health etc. Table : 1.1 7  EXERCISE Q. 1. Choose the correct option : Q. 2. Complete the correlation : 1) Statements related to Economics : 1) Natural sciences : Exact sciences : : Social a) Economics is a social science. sciences : b) Concept of economics is derived from Greek 2) Physics : : : Psychology : Social science word ‘Oikonomia’. 3) Arthshastra : Kautilya : : Wealth of Nations : c) Economics is related to the study of human economic behavior. d) Economics is related to management of the 4) Necessity : : : Comforts : Washing household. machine Options : 1) a, b and c 2) a and b 5) Free goods : Value-in-use : : Economic goods : 3) b and c 4) a, b, c and d 2) Statements incorrect with reference to Adam Q. 3. Identify and explain the concepts from the given Smith's definition : illustrations : a) Adam Smith is a classical economist. 1) My father purchased a two wheeler vehicle. This b) Wealth of Nations is authored by Adam Smith. helps to fulfil my travel needs. c) Economics is the science of wealth. 2) A study of the annual income of the family of d) Economics studies common man. Ramesh Options : 1) d 2) a, b and c 3) As per the data for financial year 2018-19, 3) a and d 4) c and d the country's production of goods and services 3) Key points in Lionel Robbins' definition : increased by 20%. a) Wants are unlimited 4) Karuna's mother saves ` 1000/- every month out of b) Means are limited her given salary. c) Wants are not gradable 5) Ram's father utilized his provident fund amount to d) Means have alternative uses. set up grocery store. Options : 1) a and b 2) b and c 3) a, b and d 4) a, b, c and d Q. 4. Answer the following : 1) Explain the features of wealth. 4) Statements related to wealth : a) Wealth means anything which has market value 2) Explain the characteristics of human wants. and can be exchanged for money. Q. 5. State with reasons whether you agree or disagree b) It is external to human being. with the following statements : c) Wealth has no utility. 1) All wants can be satisfied at a time. d) Wealth is scarce and exchangeable. 2) Human wants change as per the seasons and Options : 1) a, b and d 2) a, c and d preferences. 3) b, c and d 4) None of the above 3) Value-in-use and Value-in-exchange are the 5) Aspects considered in National Income : same. a) Final goods and services are included in national income. Q. 6. Answer in detail : b) Produced goods and services in a financial year 1) Explain the basic concepts of macro economics. are included in national income.  c) Double counting is avoided. d) Value is considered as per market price. Options : 1) a and c 2) b and c 3) a, b and d 4) a, b, c and d 8  CHAPTER - 2 : MONEY Introduction : Barter system : It refers to exchange of goods Man is an intellectual animal. The for goods. invention of money is one of the important Difficulties in Barter System : and fundamental inventions out of various 1) Problem of double coincidence of wants : inventions in the world. According to Crowther, Lack of double co-incidence of wants there is a basic invention in each branch of was one of the major limitations of barter knowledge, e.g. invention of fire in science, system. For instance, person ‘A’ has cloth invention of wheels in mechanical science. and he wants rice in exchange and person The concept of money is an important concept ‘B’ has rice but he does not want cloth in which has brought about a revolutionary change exchange. In this case exchange between in the economic life of human beings. Various ‘A’ and ‘B’ would not take place as their goods and services are bought and sold with the wants do not coincide with each other. help of money, to satisfy human wants. Modern 2) Lack of common measure of value : While economy is dependent on money. Money which exchanging goods for goods, there was no is in circulation today was created to reduce the standard unit of account to determine the difficulties in Barter System. value of a commodity. e.g., it was difficult to compare two litres of milk with two kilograms of rice. 3) Difficulties in storage of goods : It is necessary to store goods for future consumption. Sometimes due to perishable nature of certain goods it was difficult to store them for future. Perishable commodities like milk, eggs, fish, vegetable etc. were difficult to store. Difficulties were also experienced due to lack of space required to store heavy and bulky goods. 4) Indivisibility of certain goods : In barter system it was inconvenient to divide Fig. 2.1 : Barter system animals, house etc. into small parts, so it was difficult to fix proportion of one commodity Problem of double in exchange for another commodity, e.g. coincidence of wants Individual 'A' has a sack of wheat and he Lack of common wants a goat in exchange. Individual 'B' has a measure of value goat and he wants only half a sack of wheat. Difficulties in In this situation exchange between the two Difficulties in Barter System commodities is impossible due to indivisible storage of goods nature of goat, for it being a live stock. Indivisibility of 5) Problem of making deferred payments : certain goods Deferred payment means payments to be Problem of making made in future. Repayment of loan was deferred payments difficult due to exchange of commodities, 9  e.g. it was difficult to repay the perishable goods in the same condition in future. Definitions of Money : 1) Prof Crowther : "Money is anything that is generally acceptable as a means of exchange and at the same time acts as a measure and a store of value". Till Date 2) Prof Walker : "Money is what money does". Evolution of money : Money has come into existence by evolution and not by revolution. With passage 8) Electronic Money of time, the commodities which 7) Plastic Money were used as money have changed depending upon the need of time 6) Credit Money and development of civilization. 5) Paper Money Money used in modern times is 4) Metallic coins a result of many evolutionary changes that took place over a 3) Metallic Money long period of time. 2) Commodity Money Following are the types of money which very well explain the 1) Animal Money evolution of money (Fig. 2.2). Types of Money : 1) Animal money : In protohistoric period, ‘animal money’ was used as a means of exchange, e.g. cow, sheep, goat etc. However, due to their indivisible nature, commodity money came into existence. 2) Commodity money : In olden days, the commodities to be used as money were dependent upon climatic conditions and culture, e.g. animal skin, grains, shells, feathers, tusk, salt, rare articles and stones were used as a medium of exchange. Due to the problem of storage of such commodities, metallic money came into existence. 3) Metallic money : Metallic money used durable metals such as gold, silver, copper, aluminum, nickel etc. However, scarcity of precious metals and lack of uniformity in metallic pieces gave rise to the use of metallic coins. 4) Metallic coins : In ancient times, rulers of various kingdoms used small pieces of metals and affixed their seals on them. With the passage of time, the monetary system was taken over by the government authorities with a view to give uniformity and legal status to metallic coins. Coins can be classified as under : a) Standard or full bodied coins : Full bodied coins are those whose face value is equal to their intrinsic value. Face value indicates the protohistoric exchange value fixed by issuing authority. These coins are made out of period precious metals like gold, silver etc. Standard coins were used for some days during the British period. Fig. 2.2 : Evolution b) Token coins : Token coins are those whose face value is higher of Money 10  than their intrinsic value. These coins are smart cards, computer etc. It is backed by made of cheaper metals like aluminum, the Central Bank. Electronic money is used nickel etc. These coins are of lower for purchases and transactions globally. denominations and are generally used for Digital wallets are also a form of stored settling smaller transactions. In India, all electronic money. coins in circulation today are token coins. Difficulties in transportation of token coins Find out : gave rise to paper money. List of various modes of digital transactions. 5) Paper Money : Paper Money was a substitute for metallic money. In course of time, issue of currency notes was monopolized by the You should know : Central Bank. Paper money consists of a) Legal Tender Money : It is the money paper currency issued by Government and which is backed by law and cannot be Central Bank of the country. refused in transaction by anybody on any In India, one rupee note and all coins are ground. In India, all coins and currency issued by the Government of India. Currency notes are legal tender money. notes of higher denominations are issued by b) Non-Legal tender Money : It is the money the Central Bank (Reserve Bank of India). Inconvenience in handling and risk of storing which is generally used by people in final paper money gave rise to bank money. payments but there is no legal compulsion of acceptance. It can be refused. Cheques, bills 6) Bank Money or Credit Money : Bank of exchange are examples of this money. It money refers to deposits which are in the is also known as optional money. form of cash saved by the people. It is used to create credit money. This can be withdrawable and transferable on demand, Qualities of Money : by means of cheque, demand draft etc. The qualities of money are as follows : Cheque, demand draft are not actual money 1) General Acceptability : Anything which is but credit instruments through which deposits used as money must be easily accepted by are transferable. Credit money plays an all for exchange purpose. important role in economic development. On the background of global economy, cashless 2) Divisibility : Money should be easily transaction gained importance thereby divisible into smaller denominations to giving rise to plastic money. facilitate small transactions. 7) Plastic Money : Plastic Money is easy 3) Durability : Money should also possess the to use in transaction due to advanced characteristic of durability. Currency notes technology. Debit cards and credit cards are and coins are being used repeatedly and used as plastic money. Further innovation shall continue to do so for years together on in smart transactions led to the introduction account of durability. of electronic money. 4) Cognizability : Money must be easily recognised. It should have certain distinct Find out : Recent changes introduced by marks so as to avoid confusion by the banks for safe use of plastic money. receiving person. 8) Electronic Money : E-money or Electronic 5) Portability : It should be easy to carry from money is a monetary value that is stored one place to another without any difficulty, and transferred electronically through a expense and inconvenience, e.g. currency variety of means i.e. a mobile phone, tablet, notes are easily portable. 11  6) Homogeneity : Money of a particular building, plot, shop, agricultural land etc. can denomination must be homogeneous or be sold at one place and can be purchased at identical in its features. another place with the help of money. 7) Stability : Money should have a stable C) Contingent Functions : monetary value. It serves as a measure According to Prof. Kinley, in the modern of value to exchange goods and services. period money plays an important role almost in These goods can be sold and purchased in all economic transactions. future as per requirements. 1) Measurement of National Income : Functions of Money National Income is expressed in money A) Primary Functions : terms. Distribution of national income 1) Medium of Exchange : The most important among the four factors of production is function of money is to serve as a medium in terms of monetary rewards. e.g. rent, of exchange. Any commodity can be wages, interest, profits etc. purchased or sold for money. 2) Basis of Credit : Commercial Banks 2) Measure of Value or Unit of account : Price create credit money on the basis of primary is the value of a commodity or a service deposits. Money provides a liquid base for expressed in terms of money. Money enables creation of credit money. to compare the prices of commodities. 3) Imparts liquidity to wealth : Money is Different currencies are used to express the called the most liquid asset. Money can value of commodity in different countries, e.g. Rupee in India. Dollar in U.S.A., be easily converted into any asset and any Pound in U.K., Yen in Japan etc. Income asset can be converted into money. e.g. a and expenditures of all kinds, assets and person can purchase gold and if he wants liabilities are stated in terms of money as a he can sell it and purchase government unit of account. bonds, securities etc. B) Secondary Functions : 4) Estimation of macro economic variables : Macro Economic variables like Gross 1) Standard of deferred payments : Under National Product (GNP), total savings, barter system taking loans was easy, but total investment etc. can be easily estimated its repayment was difficult because loan was in the form of grains, cattle etc. Money in monetary terms. It also facilitates has overcome this difficulty. Payments to government tax collection, preparation of be made at a future date is called deferred budget etc. payments. By serving as a standard measure Concept of Black Money : of payment over a time, money makes Black Money is any money which is received borrowing and lending easy. in cash but not accounted for and on which tax 2) Store of value : Money acts as a store is not paid to the government. Black Money is of value. Money not only satisfies wants tax evaded income. It can be earned through in the present but also makes provision both legal and illegal means. Black money for satisfaction of wants in future. This is encourages illegal activities such as corruption, possible due to savings. According to Lord bribery, black marketing, hoarding etc. This J. M. Keynes, 'money is a link between the creates obstacles in economic development. present and future'. Economic, political and social instability are 3) Transfer of Value : Money enables transfer created in the economy due to black money. To of value from one person to another and control black money, demonetization is one of from one place to another. Real assets like the tools, which many countries have adopted. 12  EXERCISE Q. 1. Complete the correlation : Q. 4. Identify and explain the concepts from the given 1) Primary function of money : Medium of exchange illustrations : :: : Transfer of value 1) Vasantsheth provides coal from his shop to farmers 2) : Basis of credit : Secondary functions of in exchange for foodgrains. money : standard of deferred payments. 2) Babanrao deposits his money in a nationalized bank. 3) Commodity money : Shells : : : Credit card 3) Charu used her debit card to purchase a shirt for her younger brother. 4) Divisibility : Smaller denomination; :: 4) Malathi purchased a house through an agent. The Easy to carry from one place to another. agent accepted the commission amount in cash but 5) Barter system : Goods : : Modern economy did not issue a receipt to her. Q. 2. Give economic terms: 5) To prevent misuse/fraudulent use of the national currency, a note ban is imposed on its use at certain 1) The act of exchanging goods for goods -............... times....................... 2) Provision for making payments in future -............. Q. 5. State with reasons whether you agree or........................ disagree with the following statements : 3) System that makes use of currency for facilitating 1) There are no difficulties in barter system. payments -................................. 2) There are many good qualities found in modern 4) Credit instrument through which bank deposits are currency. transferable -.............................. 3) Many tasks are accomplished by money. 5) Monetary value stored and transferred 4) Money can be sent anywhere through elecrtonic electronically by means of computer hard drive or means. servers -........................................... 6) Money not accounted for in the bank and not Q. 6. Answer the following questions on the basis of the disclosed to the government -....................... following information : Ganesh travelled to the mall by bus. He gave the Q. 3. Choose the correct option : conductor ` 10 coin for the ticket. He purchased many 1) Arrange in the order of evolution of money. commodities from the mall. a) Metallic money At the billing counter, he gave his credit card for b) Animal money payment but the billing clerk informed him that only c) Metallic coins debit cards were accepted. Since Ganesh had forgotten his d) Commodity money debit card at home, he offered to make payment by cash. Option : 1) a, b, c, d   2) b, d, a, c 1) Identify the types of money used in the information 3) d, c, a, b   4) c, a, b, d 2) Explain any two of them. 2) Arrange in the order of evolution of money.  a) Plastic money b) Paper money c) Electronic money d) Credit money Option : 1) b, d, a, c 2) a, b, c, d 3) d, c, b, a 4) c, b, a, d 13  CHAPTER - 3 : PARTITION VALUES LET'S RECALL Are you familiar with the word ‘averages’? Can you tell the meaning of individual series, discrete data and continuous data. Name the positional averages that you have previously studied. Types of Individual Discrete Continuous Average Data Data Data 1) Arithmetic Σfi xi Σfi xi x = Σx x= Direct method x = Mean n n n 2) Mode Value repeated maximum number of times The value which has maximum frequency f1 – f0 [ Mode = l + 2f1 – f0 – f2 × h ] 3) Median ( M = size of n+1 2 ) th observation M = size of(n+1 2 ) th observation M=l+ ( 2 f ) n – cf ×h Introduction : The procedure of dividing the data into equal Do you know? parts is called 'partitioning'. Values dividing the Statistics Day : Prof. Prasanta Chandra data into a required number of equal parts are Mahalanobis, an Indian Statistician was called 'Partition Values'. instrumental in formulating India's strategy In Class X, you have already studied for industrialization in the Second Five about the measures of central tendency i.e. Year Plan (1956-61) which later came to be averages such as Arithmetic Mean, Median and known as Mahalanobis Model. Mode. Median is the value of the middlemost Mahalanobis devised a measure of observation in the data when the observations comparison between two data sets that is are arranged in increasing or decreasing known as the Mahalanobis distance. He order of values. 'Median', is a special type of also devised a statistical method called partition value because there are equal number 'fractile graphical analysis' which could be of observations above as well as below it. Like used to compare the socio-economic Median, Quartiles, Deciles and Percentiles are conditions of different groups of people. In also partition values, since they divide the given recognition of the notable contributions set of observations into equal number of parts. made by P. C. Mahalanobis in the field of In general, they are referred to as 'fractiles'. economic planning and statistical Partition values form a part of descriptive development, the Government of India has statistics. designated 29th of June every year, In the forthcoming chapters such as coinciding with his birth anniversary as Population, Unemployment and Poverty, 'Statistics Day', in the category of Special students will get acquainted with the use of day to be celebrated at the national level. partition values in economic data analysis. 14 Need for Partition Values : known as Q1, Q2 and Q3 respectively.Second The data consists of extreme values on the quartile is nothing but the median. To findout lower side and also on the higher side in quartiles, generally the data is arranged in magnitude. Such values are known as 'outliers'. ascending order. The average used for such data often It is explained in the following example : misinterprets its representative value. To overcome this misinterpretation, generally (1) Q1 (2) Q2 (3) Q (4) 3 partition values like median, quartiles, deciles and percentiles are used. a) In general, for individual and ungrouped data we get the formula for Q1, Q2 and Q3 Always remember : as given below : Q2 = D5 = P50 = Median Qi = size of i 4( ) n + 1 th Observation. i = 1, 2, 3 b) For grouped data or continuous data, You should know : Application of Quartiles, Deciles and Percentiles in Economics : Quartiles are used in the study of all types Qi = l + ( in – cf 4 f ) × h  i = 1, 2, 3 Where of financial information concerning l = Lower limit of quartile class. economic data, income data, stock data, sales and survey data etc. f = Frequency of the quartile class Income quartiles is the most objective cf = Cumulative frequency of the class preceding method of comparing changes among the quartile class. individual income groups caused by n = Total of frequency. economic changes such as wage h = Upper limit - lower limit of the quartile class. fluctuations and inflation. Deciles too have wide application in Calculation of Quartiles finance and economics. Government uses deciles to study the level of economic Solved Examples inequality, measurement of poverty line, A) Individual Data : drought conditions etc. 1) Calculate Q1 and Q3 of the first semester Deciles are used in investments, particularly examination marks scored by the students as to assess the performance of a portfolio given : 40, 85, 84, 83, 82, 69, 68, 65, 64, 55, 45 investment such as a group of mutual funds. Solution :Arrange the series in ascending order Percentiles are used in the measurement of i.e. 40, 45, 55, 64, 65, 68, 69, 82, 83, 84, 85 test scores, health indicators, household n = Total number of observations income, household wealth, percentile wages. n = 11 Percentiles can be used for benchmarking and baseline purposes. Q1 = size of (4 ) n + 1 th Observation. LET’S LEARN : Q1 = size of ( 4 ) 11 + 1 th Observation Quartiles : Q1 = size of 4 ( ) 12 th Observation Meaning : 'Quartiles' are values of data which Q1 = size of 3rd Observation. divide the whole set of observations into four Q1 = size of 3rd Observation. is 55 equal parts. There are three Quartiles which divide the data into 4 equal parts. They are    ∴ Q1 = 55 15 Third Quartile Solution : Arrange the data in ascending order ( ) and find out the cumulative frequency. th Observation n+1 Q3 = size of 3 4 Income (lakh `) No. of Person Cumulative ( ) (f) frequency (cf) th Observation 11 + 1 (x) Q3 = size of 3 4 4 6 6 ( 124 ) 5 8 14 th Observation Q3 = size of 3 6 9 23 Q3 = size of (3 × 3) th Observation 9 12 35 Q3 = size of 9th Observation is 83 10 10 45 12 8 53 ∴ Q3 = 83 15 6 59 Ans : Q1 = 55, Q3 = 83 n = 59 2) Calculate Q3 for the given distribution. 20, 28, 31, 18, 19, 17, 32, 33, 22, 21 Q1 = size of ( n+1 4 ) th Observation Solution : Arrange the data in ascending order. Q1 = size of ( 59 + 1 4 ) th Observation 17, 18, 19, 20, 21, 22, 28, 31, 32, 33 ( ) th Observation 60 n = 10 Q1 = size of 4 Q3 = size of 3 4 ( ) n + 1 th Observation Q1 = size of 15th Observation Q3 = size of 3 ( ) 10 + 1 th Observation 4 Size of 15th observation lies in cf 23, hence quartile value = ` 6 lakhs Q3 = size of 3 × 4( ) 11 th Observation ∴ Q1 = ` 6 lakhs Q3 = size of 4 ( ) 33 th Observation Q3 = size of 3 ( n+1 4 ) th Observation Q3 = size of 8.25th Observation Q3 = size of 8th observation + 0.25 (9th observation – 8th observation) Q3 = size of 3 ( 59 + 1 4 ) th Observation ( 604 ) th Observation Q3 = 31 + 0.25 (32 – 31) Q3 = size of 3 Q3 = 31 + 0.25 × 1 Q3 = size of (3 × 15)th Observation ∴ Q3 = 31.25 Q3 = size of 45th Observation Ans : Q3 = 31.25 Size of 45th observation lies in cf 45, hence quartile value = ` 10 lakhs B) Discrete Data : By arranging the observations ∴ Q3 = ` 10 lakhs in the data in ascending or descending order, we derive : Ans : Q1 = ` 6 lakhs, Q3 = ` 10 lakhs Qi = size of i 4( ) n + 1 th Observation    where i = 1, 2, 3 C) Continuous data : Q1 and Q3 for continuous 1) Find out Q1 and Q3 from the following data. frequency distribution are calculated by applying the following steps. Income (lakh `) 5 4 9 12 15 6 10 1) Arrange the data in ascending or descending No. of Person 8 6 12 8 6 9 10 order. 16  2) Write respective frequencies of the class. Step II 3) Find out cumulative frequency (cf) 4) Determine the quartile class. Q1 = l + ( n – cf 4 f ) ×h Formula : Step - I : First find the value of quartile Q1 = 30 + ( 50 – 7 4 20 × 10 ) Q1 = size of 4 ( ) n th Observation Q1 = 30 + ( 12.5 – 7 ) × 10 20 Q3 = size of 4 ( ) 3n th Observation Q1 = 30 + 5.5 ( ) × 10 20 Step - II : Q1 = 30 + 55 ( ) Qi = l + ( in – cf 4 f )×h i = 1, 2, 3 20 Q1 = 30 + 2.75 Q1 = 32.75 Where l = Lower limit of quartile class. ∴ Q1 = 32.75 f = Frequency of the quartile class Step I ( 3n4 ) th Observation cf = Cumulative frequency of the class preceding Q3 = size of the quartile class. n = Total of frequency. h = Upper limit - lower limit of the quartile class. Q3 = size of 4 ( 3 × 50 th Observation ) 1) Find out Q1 and Q3 quartile for the following Q3 = size of 4 ( ) 150 th Observation data. Q3 = size of 37.5th Observation Rainfall (in cms) 20-30 30-40 40-50 50-60 37.5 lies in cf 44 hence third quartile class is No. of years 7 20 17 6 40 - 50 ∴ l = 40 f = 17 cf = 27 n = 50 h = 10 Rainfall No. of Cumulative (in cms) years (f) frequency (cf) Step II 20-30 30-40 7 20 7 27 Q3 = l + ( 3n – cf 4 f ×h ) ( ) 40-50 17 44 3 × 50 – 27 50-60 6 50 4 n = 50 Q3 = 40 + × 10 17 Step I n Q1 = size of 4 ( ) th Observation Q3 = 40 + ( 17 ) 37.5 – 27 × 10 50 Q1 = size of 4 ( ) th Observation 10.5 ( ) Q3 = 40 + 17 × 10 Q1 = size of (12.5)th Observation Q3 = 40 + 17 105 ( ) Q3 = 40 + 6.18 12.5 lies in cf 27, therefore first quartile class is ∴ Q3 = 46.18 30 - 40 ∴ l = 30 f = 20 cf = 7 n = 50 h = 10 Ans : Q1 = 32.75, Q3 = 46.18 17 Deciles : Calculation of D8 ( ) Meaning : 'Deciles' are values of data which n + 1 th Observation divide the whole set of observations into D8 = size of 8 10 ( ) ten equal parts. There are nine points i.e. D1, 9 + 1 th Observation D2 to D9 which divide the data into 10 equal D8 = size of 8 10 parts. To find out deciles, generally the data is arranged in ascending order. D8 = size of 8 10 ( ) 10 th Observation a) For calculating D1 to D9 for individual and D8 = size of (8 × 1)th Observation discrete data, use the following formula. D8 = size of 8th Observation ( Dj = j n+1 10 ) th Observation where j = 1, 2...9 ∴ D8 = 14 b) For grouped data or continuous data, Ans : D4 = 10, D8 = 14 ( ) jn – cf 10 2) Calculate D8 from the given data Dj = l + × h, j = 1, 2...9 f 14, 13, 12, 11, 15, 16, 18, 17, 19, 20 Where Solution : First arrange the data in ascending D= Decile order. l = Lower limit of decile class 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 f = Frequency of decile class cf =Cumulative frequency of class preceding n = 10 decile class h = Upper limit of the class - lower limit of the D8 = size of 8 10 ( ) n + 1 th Observation decile class. D8 = size of 8 10 ( ) 10 + 1 th Observation Calculation of Deciles Solved Examples D8 = size of 8 10 ( ) 11 th Observation A) Individual Data : D8 = size of (8 × 1.1)th Observation 1) Calculate D4 and D8 for the following data. D8 = size of (8.8)th Observation 10, 15, 7, 8, 12, 13, 14, 11, 9 D8 = size of 8th observation + 0.8 (9th observation – 8th observation) Solution : Arrange the data in ascending order. D8 = 18 + 0.8 (19 – 18) 7, 8, 9, 10, 11, 12, 13, 14, 15 D8 = 18 + (0.8 × 1) ( n+1 D4 = size of 4 10 ) th Observation D8 = 18 + 0.8 ∴ D8 = 18.8 D4 = size of 4 ( 9+1 10 ) th Observation Ans : D8 = 18.8 10 ( ) th Observation D4 = size of 4 10 B) Discrete data : 1) Find out D2 and D4 for the following data. D4 = size of (4