B.

Com Semester-II Business Statistics (16 Marks Answers)

Q1. Explain the meaning and definition of Statistics.

Introduction
The term 'Statistics' has been derived from the Latin word 'Status', meaning a political
state.
In early times, statistics was used to collect information about the state and its
resources.
In modern usage, statistics refers not only to numerical data but also to the science of
collecting,
analyzing, interpreting, and presenting such data.

Meaning
Statistics has two senses:
1. Plural Sense (Statistical Data) – Refers to numerical facts collected in a systematic
manner.
Example: Population figures, literacy rates, production data.
2. Singular Sense (Statistical Science) – Refers to the body of techniques and methods
used
for data collection, classification, analysis, and interpretation.

Definitions by Experts
- Horace Secrist – "Statistics may be defined as the aggregate of facts, affected to a
marked extent
by multiplicity of causes, numerically expressed, enumerated or estimated according to
a reasonable
standard of accuracy, collected in a systematic manner for a predetermined purpose
and placed
in relation to each other."
- A.L. Bowley – "Statistics is the science of counting."
- Croxton and Cowden – "Statistics may be defined as the science of collection,
presentation,
analysis, and interpretation of numerical data."

Features of Statistics
1. Numerical Expression – Statistics deals with numerical facts only.
2. Aggregates of Facts – Individual figures are not statistics; only aggregates are.
3. Affected by Multiplicity of Causes – Data is influenced by many factors.
4. Reasonable Accuracy – Data must be collected with care and accuracy.
5. Systematic Collection – Random, unplanned figures are not statistics.

Example
If we record the ages of all students in a class, the entire set of data represents statistics
in the plural sense.
Conclusion
Statistics is both a science and an art. As a science, it develops principles for data
handling;
as an art, it helps in interpreting data for decision-making. In modern business, statistics
is
indispensable for planning, control, and analysis.

Q2. Discuss the functions and importance of Statistics.

Introduction
Statistics plays a vital role in business, economics, and decision-making. It not only
involves the
collection of numerical data but also the interpretation and use of such data for solving
practical problems.

Functions of Statistics
1. Collection of Data – Organizes the process of gathering accurate and relevant
numerical information.
2. Presentation of Data – Represents data through tables, charts, and diagrams for easy
understanding.
3. Analysis of Data – Uses measures like averages, percentages, correlation, and
regression to derive conclusions.
4. Interpretation – Draws meaningful inferences from analyzed data.
5. Forecasting – Predicts future trends based on past data patterns.
6. Formulation of Policies – Helps managers and governments in policy-making.
7. Simplification of Complex Facts – Converts large data into understandable summaries.

Importance of Statistics
1. Business Decision-Making – Provides a factual basis for business strategies.
2. Economic Planning – Used in national income, price index, and employment data.
3. Quality Control – Ensures products meet desired standards using statistical quality
checks.
4. Research – Assists in formulating and testing hypotheses.
5. Social Development – Helps in understanding social issues like poverty, literacy, and
health.
6. Market Analysis – Studies consumer preferences and market trends.

Conclusion
Statistics is indispensable in the modern era. It transforms raw data into meaningful
information,
allowing individuals, businesses, and governments to make informed, evidence-based
decisions.
Q3. Write a note on the limitations and distrust of Statistics.

Introduction
While statistics is a powerful tool, it also has certain limitations and can be misused or
misunderstood, leading to distrust.

Limitations of Statistics
1. Deals with Quantitative Facts Only – Cannot handle qualitative aspects unless
quantified.
2. Cannot Study Individuals – Focuses on groups or aggregates, not single cases.
3. Requires Skilled Handling – Misinterpretation is possible without proper training.
4. Lacks Perfection – Data collection and analysis can never be 100% accurate.
5. Does Not Establish Causation – Shows correlation but cannot always explain cause-
effect relationships.

Reasons for Distrust

1. Misuse by Interested Parties – Data can be manipulated to mislead.
2. Inaccurate Data – Poor collection methods reduce reliability.
3. Complex Techniques – Non-experts may find results difficult to understand.
4. Over-Generalization – Drawing conclusions from inadequate samples.
5. Bias in Presentation – Selective use of data to prove a point.

Conclusion
Statistics is a valuable servant but a poor master. Its limitations and possible misuse
mean that
it must be applied with caution, accuracy, and transparency.

Q4. Explain Census and Sampling with their methods.

Introduction
In statistics, there are two primary methods for collecting data about a population:
Census and Sampling.
Understanding their meaning and methods is essential in statistical surveys.

Census Method
Definition – In the census method, information is collected from every unit of the
population.
Example – Population census conducted by the government.
Methods:
1. Direct Personal Investigation – Investigator collects data personally.
2. Indirect Oral Investigation – Data collected through intermediaries or witnesses.
3. Information from Local Agents – Local agents collect and provide information.
4. Mailed Questionnaire – Forms sent to respondents for completion.
5. Schedules Sent Through Enumerators – Enumerators fill forms by questioning
respondents.
Sampling Method
Definition – Only a portion of the population is studied, and results are generalized to
the whole.
Methods:
1. Random Sampling – Every unit has an equal chance of selection (simple random,
lottery method).
2. Stratified Sampling – Population divided into homogeneous groups (strata), and
samples taken from each.
3. Systematic Sampling – Selecting every nth unit from a list.
4. Cluster Sampling – Population divided into clusters; some clusters fully surveyed.
5. Quota Sampling – Fixed quotas for each segment of the population.
6. Convenience Sampling – Selecting units most easily available.

Conclusion
Census provides complete accuracy but is time-consuming and costly. Sampling saves
time and cost
but requires scientific design to ensure representativeness.

Q5. What is Classification and Tabulation of data? Explain.

Introduction
Once data is collected, it must be arranged in an orderly manner for analysis.
Classification and tabulation are two key steps in organizing data.

Classification
Definition – The process of arranging data into classes or groups based on common
characteristics.
Types:
1. Geographical Classification – Based on location (e.g., state-wise data).
2. Chronological Classification – Based on time sequence.
3. Qualitative Classification – Based on attributes (e.g., gender, religion).
4. Quantitative Classification – Based on numerical values (e.g., income levels).

Tabulation
Definition – Presenting data systematically in rows and columns to facilitate comparison
and analysis.
Parts of a Table:
1. Title – Indicates subject matter.
2. Headings – Row and column captions.
3. Body – Numerical data entries.
4. Footnotes – Additional explanations.
5. Source – Origin of data.

Importance:
- Makes data easy to understand.
- Helps in comparison and analysis.
- Saves space and time in presentation.

Conclusion
Classification groups the data logically, while tabulation presents it systematically,
making analysis easier and more accurate.

Q6. Define Primary data and Secondary data with collection methods.

Introduction
Data can be broadly classified into two types based on the source: Primary data and
Secondary data.

Primary Data
Definition – Data collected for the first time by the investigator for a specific purpose.
Methods of Collection:
1. Direct Personal Investigation – Researcher personally collects data.
2. Indirect Oral Investigation – Collected from knowledgeable persons.
3. Through Questionnaires – Respondents fill written questions.
4. Through Schedules – Enumerators record responses.
5. Observation – Investigator directly observes events.

Secondary Data
Definition – Data already collected by others and used for another purpose.
Sources:
1. Government Publications – Census reports, economic surveys.
2. International Organisations – UN, WHO reports.
3. Trade Journals – Industry magazines.
4. Websites and Databases – Online statistical sources.

Conclusion
Primary data is more accurate but costly and time-consuming. Secondary data is quick
to obtain
but may be outdated or unsuitable unless carefully evaluated.

Q7. Explain different types of Averages.

Introduction
Averages are statistical measures used to represent a set of data by a single value that is
typical
or representative of all the values. They are also called measures of central tendency.

Types of Averages
1. Arithmetic Mean (AM)
- Definition: Sum of all observations divided by the number of observations.
- Formula: AM = Σx / n
 - Example: If marks are 10, 20, 30, AM = (10+20+30)/3 = 20.

2. Median
- Definition: The middle value when data is arranged in ascending or descending order.
- Useful for skewed distributions.

3. Mode
- Definition: The value which occurs most frequently in the data set.

4. Geometric Mean (GM)

- Definition: The nth root of the product of n values.
- Formula: GM = (x1 * x2 * ... * xn)^(1/n)

5. Harmonic Mean (HM)

- Definition: Reciprocal of the arithmetic mean of reciprocals of values.
- Formula: HM = n / Σ(1/x)

Importance of Averages
- Simplifies complex data.
- Facilitates comparison between groups.
- Useful in statistical analysis and forecasting.

Conclusion
Averages condense data into a single representative value, making interpretation and
comparison easier.

Q8. State the merits and demerits of Arithmetic Mean.

Introduction
Arithmetic Mean (AM) is the most commonly used average in statistics. It is simple to
compute and understand.

Merits of AM
1. Simple to Calculate – Easy to compute using a formula.
2. Based on All Observations – Considers every value in the dataset.
3. Mathematical Properties – Suitable for further algebraic treatment.
4. Rigid Definition – Value is unique and not subject to interpretation.
5. Representative – Gives a central value for the data.

Demerits of AM
1. Affected by Extreme Values – Very high or low values can distort the mean.
2. Unrealistic Value – May not exist in the actual data set.
3. Misleading in Skewed Data – Does not represent typical values in highly skewed
distributions.
4. Cannot be Used for Qualitative Data – Only applicable to numerical data.
Conclusion
Arithmetic Mean is a useful measure when data is evenly distributed, but care must be
taken in skewed datasets.

Q9. Write the merits and demerits of Median.

Introduction
The Median is the middle value of an ordered dataset and is a measure of central
tendency.

Merits of Median
1. Simple to Understand – Easy to calculate and interpret.
2. Not Affected by Extreme Values – Stable even when data has outliers.
3. Applicable to Qualitative Data – Useful for ranked or ordered data.
4. Best for Skewed Distributions – Represents central location accurately.

Demerits of Median
1. Ignores Extreme Values – Does not consider the magnitude of extreme values.
2. Less Suitable for Further Analysis – Limited algebraic properties.
3. May Not be a Data Value – Could be an interpolated figure.
4. Affected by Sampling Fluctuations – Different samples may give varying medians.

Conclusion
The median is best suited for skewed data or when extreme values are present, but it
lacks mathematical usefulness.

Q10. Explain the merits and demerits of Mode.

Introduction
Mode is the value that appears most frequently in a dataset. It is another measure of
central tendency.

Merits of Mode
1. Simple to Compute – Easily determined by observation in discrete data.
2. Not Affected by Extreme Values – Stable when data has outliers.
3. Represents Typical Value – Shows the most common occurrence.
4. Applicable to Qualitative Data – Can be used for attributes like brand preference.

Demerits of Mode
1. Uniqueness Problem – A dataset can have no mode or multiple modes.
2. Not Based on All Observations – Considers only the most frequent value.
3. Not Suitable for Further Analysis – Lacks mathematical properties.
4. Instability – Mode can change with small variations in data.

Conclusion
Mode is ideal for knowing the most common value in a dataset but is less reliable for
comprehensive analysis.

Q11. Explain types and importance of diagrams in Statistics.

Introduction
In statistics, diagrams and graphs are visual tools to present numerical data in an easy-
to-understand manner.
They make patterns, trends, and relationships in data clearer.

Types of Diagrams
1. Geometrical Diagrams
- Bar Diagrams: Simple, multiple, and component bar charts.
- Pie Diagrams: Circular charts showing percentage composition.
2. Frequency Diagrams
- Histogram: Rectangles showing frequency distribution.
- Frequency Polygon: Lines connecting midpoints of histogram bars.
3. Pictograms
- Uses pictures or symbols to represent data.
4. Cartograms
- Geographical maps showing data distribution.

Importance
- Simplifies complex data.
- Attracts attention and creates interest.
- Facilitates comparison.
- Useful in presentations and reports.

Conclusion
Diagrams and graphs enhance understanding by translating figures into visual form,
making them more meaningful.

Q12. What is Correlation? Explain its types and methods.

Introduction
The term correlation refers to the statistical relationship between two variables,
showing whether and how strongly they are related.

Types of Correlation
1. Positive Correlation – Both variables move in the same direction (e.g., height and
weight).
2. Negative Correlation – Variables move in opposite directions (e.g., price and demand).
3. Zero Correlation – No relationship exists between variables.
4. Perfect Correlation – Exact proportional change between variables (r = +1 or r = -1).
5. Imperfect Correlation – Relationship exists but not perfectly.
Methods of Studying Correlation
1. Scatter Diagram – Plotting points to observe relationship pattern.
2. Karl Pearson’s Coefficient – Measures degree of correlation (-1 to +1).
3. Spearman’s Rank Correlation – Measures correlation for ranked data.

Conclusion
Correlation analysis helps in understanding and predicting variable relationships, useful
for decision-making.

Q13. Explain Karl Pearson’s coefficient of correlation with merits and

demerits.

Introduction
Karl Pearson’s coefficient of correlation is a numerical measure that indicates the degree
and direction of the linear relationship between two variables.

Formula
r = Σ[(x - x̄ )(y - ȳ)] / √[Σ(x - x̄ )² * Σ(y - ȳ)²]

Merits
1. Accurate and Reliable – Provides precise measurement.
2. Indicates Both Degree and Direction – Value between -1 and +1 shows strength and
direction.
3. Mathematical Basis – Suitable for further statistical analysis.
4. Universally Accepted – Widely used in research and business.

Demerits
1. Assumes Linear Relationship – Not suitable for non-linear data.
2. Sensitive to Extreme Values – Outliers can distort results.
3. Requires Quantitative Data – Cannot handle qualitative attributes.
4. Complex Calculations – Requires more computation than visual methods.

Conclusion
Karl Pearson’s method is a powerful tool for measuring correlation but should be used
cautiously when data is skewed or non-linear.

Q14. What are Index Numbers? Explain their types, methods, and uses.

Introduction
Index numbers are statistical measures designed to show changes in variables over
time, such as prices, quantities, or values.

Types of Index Numbers

1. Price Index – Measures changes in prices of goods/services (e.g., Consumer Price
Index).
2. Quantity Index – Measures changes in quantities of production or sales.
3. Value Index – Measures changes in total value (price × quantity).

Methods of Construction
1. Simple Aggregative Method – Sum of current year prices divided by base year prices ×
100.
2. Simple Average of Price Relatives – Average of percentage price changes.
3. Weighted Index – Assigns weights to items based on importance (Laspeyres, Paasche,
Fisher’s Ideal Index).

Uses
- Measuring inflation and cost of living.
- Policy formulation.
- Economic analysis.
- Adjusting wages and pensions.

Conclusion
Index numbers condense complex data into a single figure, making them essential for
economic planning and analysis.

Q15. Explain the components and uses of a Time Series.

Introduction
Time series analysis studies data points collected or recorded at specific time intervals
to identify patterns or trends.

Components of a Time Series

1. Secular Trend (T) – Long-term movement or direction of the data.
2. Seasonal Variation (S) – Regular fluctuations within a year due to seasons or festivals.
3. Cyclical Variation (C) – Long-term oscillations caused by business cycles.
4. Irregular Variation (I) – Random or unpredictable changes due to unforeseen events.

Uses
- Forecasting future trends.
- Business planning and budgeting.
- Economic and market analysis.

Conclusion
Understanding the components of time series helps in accurate forecasting and better
decision-making.

Q16. What is Moving Average? Explain its methods, merits, and demerits.

Introduction
Moving averages are statistical techniques used to smooth out short-term fluctuations
and highlight long-term trends in data.

Methods
1. Simple Moving Average – Average of fixed number of consecutive observations.
2. Weighted Moving Average – Assigns more weight to recent observations.

Merits
- Easy to calculate and understand.
- Smooths fluctuations to reveal trends.
- Useful for forecasting.

Demerits
- Lags behind actual data.
- Not suitable for irregular variations.

Conclusion
Moving averages are effective for trend analysis, particularly in sales and stock market
data.

Q17. Explain the concept, types, and uses of Regression Analysis.

Introduction
Regression analysis studies the relationship between a dependent variable and one or
more independent variables.

Types
1. Simple Regression – One independent and one dependent variable.
2. Multiple Regression – Two or more independent variables.

Uses
- Predicting values of dependent variables.
- Understanding cause-effect relationships.
- Business and economic forecasting.

Conclusion
Regression analysis is a powerful statistical tool for prediction and explanation of
variable relationships.

Q18. Define Probability. Explain its types and importance.

Introduction
Probability is a measure of the likelihood of an event occurring, expressed as a number
between 0 and 1.
Classical Definition
P(E) = Number of favourable outcomes / Total number of equally likely outcomes.

Types of Probability
1. Theoretical Probability – Based on logical reasoning.
2. Empirical Probability – Based on past data.
3. Subjective Probability – Based on personal judgment.

Importance
- Risk assessment in business.
- Insurance and actuarial calculations.
- Decision-making under uncertainty.

Conclusion
Probability theory provides a foundation for statistical inference and decision-making in
uncertain situations.

Q19. What are Theoretical Distributions? Explain their types and uses.

Introduction
Theoretical distributions are mathematical models describing how data is expected to
behave under certain conditions.

Types
1. Binomial Distribution – Discrete distribution for two possible outcomes.
2. Poisson Distribution – Discrete distribution for rare events.
3. Normal Distribution – Continuous symmetric distribution with a bell-shaped curve.

Uses
- Quality control.
- Risk analysis.
- Predictive modeling.

Conclusion
Theoretical distributions are essential for understanding and modeling real-world
phenomena in statistics.

Q20. Explain the meaning, construction, and uses of Consumer Price Index.

Introduction
The Consumer Price Index (CPI) measures the average change in prices paid by
consumers for a basket of goods and services over time.

Construction Steps
1. Selection of base year.
2. Selection of items and markets.
3. Collection of prices.
4. Assignment of weights.
5. Calculation of index using weighted average method.

Uses
- Measuring inflation.
- Adjusting wages and pensions.
- Economic analysis.

Conclusion
CPI is a vital economic indicator for monitoring inflation and cost-of-living changes.

Q21. What are Sampling and Non-Sampling errors? Explain their types and
minimization.

Introduction
Sampling errors arise when conclusions drawn from a sample differ from those of the
entire population.

Types
1. Random Sampling Error – Due to chance differences between sample and population.
2. Systematic Sampling Error – Due to biased sampling methods.

Non-Sampling Errors
- Measurement errors.
- Data processing errors.
- Non-response errors.

Minimization
- Proper sampling design.
- Increasing sample size.
- Training data collectors.

Conclusion
Understanding and minimizing errors is essential for improving the accuracy of
statistical results.

Q22. Explain Statistical Quality Control and its importance.

Introduction
Statistical quality control (SQC) uses statistical methods to monitor and control
production processes to maintain product quality.

Tools
1. Control Charts – Monitor process variation over time.
2. Acceptance Sampling – Inspect a sample to decide on accepting or rejecting a lot.

Importance
- Maintains consistent quality.
- Reduces waste and rework.
- Improves customer satisfaction.

Conclusion
SQC is an essential tool for modern manufacturing and service industries to ensure
quality standards.