NCERT Solutions for Class 11 Economics Chapter 1: Introduction (NCERT 2026–27)
These Class 11 Economics Chapter 1 solutions cover Introduction, the opening chapter of the NCERT textbook Statistics for Economics, updated for the 2026–27 session. The chapter explains why we study economics, how economic activities of consumption, production and distribution are organised, what statistics is, and how statistical methods help an economist understand, analyse and solve economic problems. Below you get step-by-step answers to all 7 NCERT exercise questions, plus key concepts, extra practice, MCQs, Assertion–Reason questions and FAQs.
Class: 11Subject: EconomicsBook: Statistics for EconomicsChapter: 1Chapter Name: IntroductionSession: 2026–27
Chapter 1, Introduction, sets the stage for the whole book by linking Economics and Statistics. Alfred Marshall described economics as “the study of man in the ordinary business of life.” We are all engaged in economic activities — as consumers, sellers, producers, employees or employers — that are undertaken for monetary gain. The chapter explains that our wants are unlimited but resources are limited and have alternative uses, so scarcity forces us to make choices; scarcity is the root of all economic problems. Economics studies man through consumption, production and distribution. To understand and solve economic problems we need reliable economic data, which is where statistics comes in. Statistics deals with the collection, analysis, interpretation and presentation of numerical data; it helps condense mass data into summary measures, find relationships between economic factors, predict future trends and frame effective policies. The chapter ends by reminding us that statistical methods are no substitute for common sense.
Key Concepts & Terms
Economics (Marshall): “the study of man in the ordinary business of life” — the study of how people and society choose to use scarce resources that have alternative uses to produce commodities and distribute them for consumption.
Economic activity: any activity undertaken for monetary (economic) gain; a person doing it is said to be gainfully employed.
Consumer, seller, producer, employee, employer: a consumer buys goods to satisfy wants; a seller sells goods to make a profit; a producer produces goods or provides services; an employee works for another for wages or salary; an employer employs others by paying them a wage.
Unlimited wants, limited resources: human wants are endless, but the resources to satisfy them are limited and have alternative uses, which creates the problem of choice.
Scarcity: the situation in which the things that satisfy our wants are limited in availability; scarcity is the root of all economic problems.
Consumption, Production, Distribution: the three conventional divisions of economics — how a consumer decides what to buy (consumption), how a producer decides what and how to produce (production), and how national income (GDP) is divided into wages, profits, rent and interest (distribution).
Economic data: economic facts collected to understand and explain economic problems; data may be quantitative (measurable, e.g. prices, incomes) or qualitative (attributes such as gender, skill level, health).
Statistics: the study of numbers relating to selected facts in a systematic form; it deals with the collection, analysis, interpretation and presentation of numerical data.
Policies: measures designed to solve an economic problem once its causes have been identified through analysis of data.
Summary measures: numerical indices such as the mean, variance and standard deviation that condense mass data and represent its broad characteristics.
NCERT “Exercises” — Full Solutions
All questions below are reproduced verbatim from the NCERT textbook’s end-of-chapter Exercises section. Answers are original, written in exam-ready style.
1. Mark the following statements as true or false.
(i) Statistics can only deal with quantitative data.(ii) Statistics solves economic problems.(iii) Statistics is of no use to Economics without data.
ANSWER(i) False. Statistics deals with both quantitative data (measurable facts such as prices, incomes and output) and qualitative data (attributes such as gender, health or skill level that are recorded and stored systematically). So it is not limited to quantitative data alone.(ii) False. Statistics by itself does not solve economic problems. It helps an economist understand and analyse a problem and find the causes behind it, so that suitable policies can be framed; the actual solution comes from policies and actions, not from statistics directly.(iii) True. Statistics works on data. No analysis of an economic problem is possible without data on the various factors underlying it, and no policy can be formulated without such analysis. Hence statistics is of no use to economics without data.
2. Make a list of activities in a bus stand or a market place. How many of them are economic activities?
ANSWERAn economic activity is one undertaken for monetary (economic) gain; a non-economic activity is done out of love, duty or sympathy, without expecting payment. A sample list from a bus stand / market place is shown below.(This is an observation activity, so your own list is accepted, provided you classify each activity correctly.)
Activity observed
Economic / Non-economic
A conductor collecting bus fares
Economic (he is paid)
A shopkeeper selling vegetables or fruit
Economic (sells for profit)
A porter/coolie carrying luggage for money
Economic (paid for the service)
A tea/snack vendor serving customers
Economic (sells for profit)
A taxi or auto driver carrying passengers
Economic (paid fare)
A customer buying goods for personal use
Economic (consumption activity)
A person helping an elderly traveller cross the road
Non-economic (done out of kindness)
A child playing while waiting for the bus
Non-economic (no monetary gain)
A friend giving directions to a stranger
Non-economic (no payment)
In this sample list of 9 activities, 6 are economic activities (those undertaken for monetary gain) and 3 are non-economic. The exact count will depend on the activities you actually observe.
3. ‘The Government and policy makers use statistical data to formulate suitable policies of economic development’. Illustrate with two examples.
ANSWERThe government and policy makers rely on statistical data to know the facts about an economic problem, measure its size, and then design policies to deal with it. Two examples:Example 1 — Poverty and welfare: Statistical data on how many people are poor, how income is distributed, and how many are illiterate or unemployed help the government decide how much to spend on welfare schemes, food subsidies, employment guarantee programmes and education, and which regions need them most.Example 2 — Production and imports: Data on past and present consumption and domestic production help planners predict future demand. For instance, statistics on the expected domestic production of oil and the likely demand for it help the government decide how much oil India should import in a given year, and similar data help fix targets for foodgrain production and prices.In both cases, exact statistical figures make the policy decisions reliable, whereas vague statements would not.
4. “You have unlimited wants and limited resources to satisfy them.” Explain this statement by giving two examples.
ANSWERHuman wants are endless — as soon as one want is satisfied, a new one appears — but the resources (money, time, goods) available to satisfy them are limited. Because of this gap, we cannot satisfy all our wants and must choose. Two examples:Example 1 — Pocket money: A student may want many things — books, snacks, a video game, clothes — but the pocket money he or she gets is limited. So the student can buy only the things wanted the most and has to leave the rest. This is a basic teaching of economics.Example 2 — Land and resources: The land, labour, water and fertiliser available to farmers at any time are limited and have alternative uses — the same resources can grow food crops or non-food crops such as cotton and jute. Since they cannot do everything at once, a choice has to be made about what to produce.Thus the conflict between unlimited wants and limited resources gives rise to the problem of choice, which is the central concern of economics.
5. How will you choose the wants to be satisfied?
ANSWERSince our wants are unlimited but our resources (income) are limited, we cannot satisfy every want and must choose. We do this by ranking our wants in order of importance (priority) and satisfying the most urgent and important ones first.Given our income and the current prices of goods, we decide which things, and in what quantities, to buy so as to get the maximum satisfaction. The most pressing wants (such as food, study material or essential needs) are met first, and less important wants are postponed or given up.For example, with limited pocket money a student first buys the textbooks and stationery needed for studies, and only then spends on snacks or entertainment if money is left. In this way, we choose the wants to be satisfied on the basis of their urgency, importance and the resources available.
6. What are your reasons for studying Economics?
ANSWER(Answers may vary; a model answer is given.) I study economics for the following reasons:1. To understand the ordinary business of life — how people earn, spend, save and make choices as consumers, producers and earners.2. To learn how to deal with the basic problem of scarcity and choice — how to satisfy unlimited wants with limited resources, and to manage my own money and resources better.3. To understand the working of the economy — how consumption, production and distribution take place and how national income is shared as wages, profits, rent and interest.4. To understand and find solutions to social and economic problems such as poverty, unemployment, inequality and rising prices, so that I can appreciate why the government frames particular policies.5. To acquire the skills of collecting, presenting and analysing data, which are useful in jobs and in making informed decisions in everyday life.
7. Statistical methods are no substitute for common sense. Comment with examples from your daily life.
ANSWERStatistics is a powerful tool, but it must be used together with common sense and proper judgement; otherwise statistical results can be misused and lead to wrong conclusions. The textbook’s own example makes this clear: a man knew the average depth of a river and the average height of his family. Since the average height was greater than the average depth, he thought the family could cross safely — but some members drowned, because an average hides the variation (the river was deeper at some points and some family members were shorter). The fault lay not with the method of calculating the average but with its misuse.Example 1 from daily life: If the average marks of a class are high, it does not mean every student has done well — a few very high scorers can pull up the average while many students still fail. Common sense tells us to also look at how the marks are spread.Example 2 from daily life: The average income of a locality may be high, yet many families there may be poor if a few very rich families raise the average. Treating everyone as well-off because of a high average would be a mistake.Thus, statistical methods help us summarise and analyse facts, but they must be interpreted sensibly. Used carelessly they can mislead, which is why they are no substitute for common sense.
Extra Practice Questions
Short Answer Type Questions
Q1. Define an economic activity. Give two examples.
ANSWERAn economic activity is any activity undertaken for monetary gain. A person doing it is said to be gainfully employed. Examples: a shopkeeper selling goods for profit, and a doctor providing medical services for a fee.
Q2. Distinguish between quantitative and qualitative data.
ANSWERQuantitative data can be measured and expressed in numbers, such as prices, incomes, taxes paid or the production of rice. Qualitative data describe attributes that cannot be measured in numbers, such as gender, beauty, intelligence or skill level, though they can still be recorded and stored systematically.
Q3. Why is scarcity called the root of all economic problems?
ANSWERScarcity means the things that satisfy our wants are limited compared with our unlimited wants. Because resources are scarce and have alternative uses, we must choose what to produce and consume. Had there been no scarcity, there would have been no problem of choice and hence no economic problem.
Q4. State any two functions of statistics in economics.
ANSWER(i) Statistics condenses mass data into a few summary measures such as the average, making large information easy to understand and remember. (ii) Statistics helps find relationships between economic factors (for example between price and demand) and to predict future trends, which helps in framing policies.
Q5. What is meant by ‘policies’ in economics?
ANSWERIn economics, policies are the measures designed to solve an economic problem once its causes have been identified. For example, after analysing the causes of poverty (unemployment, low productivity, backward technology), the government frames policies such as employment and skill-development programmes to reduce it.
Long Answer Type Questions
Q1. Explain the three conventional divisions into which the study of economics is often divided.
ANSWEREconomics involves the study of man engaged in economic activities, and it is conventionally divided into three parts. Consumption studies how a consumer, given his income and the prices of many alternative goods, decides what and how much to buy in order to satisfy his wants. Production studies how a producer chooses what to produce and how to produce it for the market, using limited resources that have alternative uses. Distribution studies how the national income or total income arising from what has been produced in the country (the Gross Domestic Product or GDP) is divided among people through wages and salaries, profits, rent and interest. Besides these three, modern economics also takes up special studies of basic national problems such as poverty, inequality, unemployment and the impact of disasters, all of which require reliable economic data.
Q2. Describe the relationship between economics and statistics.
ANSWEREconomics studies how people use scarce resources, and to understand and solve economic problems it needs reliable facts, known as economic data. Statistics — the study of numbers relating to selected facts in a systematic form — provides the methods to collect, present, analyse and interpret this data. The purpose of collecting data on problems such as poverty is to explain them in terms of their causes (unemployment, low productivity, backward technology) and then to find policies to solve them. Without data on the factors underlying an economic problem, no proper analysis is possible, and without analysis no effective policy can be framed. Statistics also expresses economic facts in precise, exact form, condenses mass data into summary measures, finds relationships between economic variables and predicts future trends. Thus statistics is an indispensable tool for the economist, and the two subjects are closely linked.
Q3. “Statistics helps an economist in many ways.” Explain what statistics does.
ANSWERStatistics is an indispensable tool that helps the economist understand and tackle economic problems in several ways. First, it helps find the causes of a problem using qualitative and quantitative facts, so that policies can be formulated. Second, it presents economic facts in a precise and definite form; exact figures (such as “310 people died”) are more convincing than vague statements (“hundreds died”). Third, it condenses mass data into a few numerical measures such as the mean and variance, so that huge amounts of information can be summarised and remembered easily. Fourth, it helps in finding relationships between economic factors, such as how demand changes with price, and in testing whether such relationships exist. Fifth, it helps in prediction and forecasting of future trends, such as estimating future consumption to plan production. Finally, it plays a vital role in policy decisions, for instance deciding how much oil to import based on expected production and demand. In all these ways statistics is essential for sound economic analysis.
MCQs & Assertion–Reason
1. Who described economics as “the study of man in the ordinary business of life”?
(a) Adam Smith (b) Alfred Marshall (c) J. M. Keynes (d) Lionel Robbins
2. A person who buys goods to satisfy his or her wants is called a:
(a) producer (b) seller (c) consumer (d) employer
3. The root of all economic problems is:
(a) inflation (b) scarcity (c) unemployment (d) population
4. Which of the following is an economic activity?
(a) A mother cooking for her family (b) Helping a friend with homework (c) A taxi driver carrying passengers for a fare (d) Playing cricket for fun
5. The division of national income into wages, profits, rent and interest is studied under:
(a) consumption (b) production (c) distribution (d) exchange
6. Statistics deals with the collection, analysis, interpretation and presentation of:
(a) goods (b) numerical data (c) opinions only (d) policies
7. ‘Gender’ that distinguishes a person as man or woman is an example of:
(a) quantitative data (b) qualitative data (c) numerical data (d) summary data
8. The total income arising from what has been produced in the country is called the:
(a) per capita income (b) Gross Domestic Product (GDP) (c) national debt (d) revenue
9. Measures designed to solve an economic problem after identifying its causes are called:
(a) data (b) statistics (c) policies (d) averages
10. The statement “the production of rice increased from 39.58 million tonnes to 106.5 million tonnes” is an example of:
(a) qualitative data (b) quantitative data (c) a policy (d) an opinion
For each Assertion–Reason question, choose: (A) Both true and the Reason correctly explains the Assertion; (B) Both true but the Reason is not the correct explanation; (C) Assertion true, Reason false; (D) Assertion false, Reason true.
A-R 1. Assertion: We have to make choices in our daily life.
Reason: Our wants are unlimited but the resources to satisfy them are limited.
A-R 2. Assertion: Statistics deals only with quantitative data.
Reason: Economics also uses qualitative data such as gender, health and skill level.
A-R 3. Assertion: No policy can be formulated to solve an economic problem without data.
Reason: Analysis of an economic problem is not possible without data on the factors underlying it.
A-R 4. Assertion: Statistical methods are no substitute for common sense.
Reason: Statistical results, such as averages, can be misused and give misleading conclusions if interpreted without judgement.
A-R 5. Assertion: An average is always a perfectly safe guide to action.
Reason: An average hides the variation within the data, as shown by the family that drowned while crossing a river of greater average depth.
Answer key: 1-(A), 2-(D), 3-(A), 4-(A), 5-(D).
Exam Tips & Common Mistakes
How to score full marks in this chapter
Learn Marshall’s definition of economics and the difference between the five roles — consumer, seller, producer, employee, employer. For true/false questions, always add a one-line reason. Remember the chain: scarcity → choice → need for data → analysis → policies, and that economics is divided into consumption, production and distribution. Be ready to explain what statistics does (condenses data, finds relationships, predicts trends, helps frame policies) and use the river-crossing story to explain why statistics needs common sense.
Common mistakes to avoid
Saying statistics deals only with quantitative data — it also handles qualitative (attribute) data.
Writing that “statistics solves economic problems” — it helps analyse them; policies solve them.
Confusing an economic activity (for monetary gain) with a non-economic one (done out of love, duty or kindness).
Mixing up consumption, production and distribution — learn what each studies.
Treating an average as fully representative — it hides variation and can mislead if misused.
Leaving observation/activity questions (Q2, Q6) blank — write your own classified examples.
Frequently Asked Questions
What is Chapter 1 of Class 11 Economics (Statistics for Economics) about?
Chapter 1, Introduction, explains why we study economics, how economic activities of consumption, production and distribution are organised, what statistics is, and how statistical methods help an economist understand, analyse and solve economic problems through reliable data.
What is the difference between quantitative and qualitative data?
Quantitative data can be measured and expressed in numbers, such as prices, incomes and output. Qualitative data describe attributes that cannot be measured numerically, such as gender, health or skill level, but can still be recorded and stored systematically. Statistics deals with both.
How many questions are there in the Class 11 Economics Chapter 1 exercise?
The end-of-chapter Exercises section of Statistics for Economics Chapter 1 contains 7 questions (including a true/false set), all answered step by step on this page.
