Basic Tools For Economic Analysis

Table Of Contents

1. Tables
2. Characteristics of tables
3. Importance of tables
4. Graphs
5. Features of graph
6. Importance of graph
7. Line graph
8. Pie graph
9. Bar chart
10. Pictogram
11. Histogram
12. Frequency distribution
13. Measure of Central tendency
14. The arithmetic mean
15. The median
16. The mode
17. Geometric mean
18. Harmonic mean
19. Quadratic mean
20. The range
21. The Quartile
22. Mean deviation
23. Variance standard deviation

Basic Tools For Economic Analysis

1. Tables:

A table is defined as a systematic and orderly arrangement of information facts or data using rows and columns for presentation which makes it easier for better understanding. The table serve as the most commonly used to for Economic analysis.

Characteristics Of Table

1. A table must be very simple.
2. It must be easy to understand
3. It must have a title or heading
4. The units of measurement used in the table must be stated.

Importance Of Table

1. A double helps to summarise the data presented
2. It assists in an orderly arrangement of data
3. A table eases comparison between different classes of data
4. A table helps to bring out the important features in the data.

2. Graphs

Graph may be defined as a diagram showing a functional relationship between two variables. Graph is one of the basic tools used by economist for Economic analysis. Information presented on tables can be translated into graph for better understanding. Examples of graph r line graph pie chart bar graph pictograph.

Features Of Graph

1. All Graph must have a title
2. Graph must possess appropriate scale
3. All grass should have x-axis on horiz
ontal side and y-axis on the vertical side
4. Graph must be labelled properly for better understanding.

Importance of Graph

1. Graph help to show relationship between two variables
2. Graph makes clearer and quicker impression about a quantitative information illustrated in a tabular form
3. Graph also help to interpret value of variables
4. Graph provides basis of comparing variables provided in the table

3. Line Graph

A line graph as the name implies is a line used for data where in emphasis is on continuous change. In other words line graph is used to join or connect the highest and lowest point of a group of data. Line graph could be straight or curve.

4. Pie Charts

A pie chart or graph is a simple cycle of any convenience size which is divided into sections or sectors each of which is proportional to the quantity or value it represents. The pie chart is usually measured in percentage or in degrees with the aid of a mathematical device called a protractor. The entire circle is represented by 350° 100% and each sector is measured in degrees with the aid of a protractor.

5. Bar Chart

Bar chart or graph is a group made up of bar of rectangle which are of equal width and whose length are proportional to the quantities they represent. The major characteristics of a bar chart is that the body of the bar must not touch each other. There must be a space or gap between one bar and another. Bar chart may be arranged vertically or horizontally.

There are three major types of bar chart. These are:

1. Simple bar chart
2.component bar chart
3.multiple bar chart.

6. Pictograms

Pictogram of pictograph charts in which pictures or drawing of objects are used to represent items in a given data. The pictures used are meant to represent the magnitude of the variables or to convey all the informations. In this case pictures or diagrams are more appreciated rather than tables or other charts.

7. Histogram

Histogram is a graphical representation of frequency distribution. It is made up of a set of rectangles that have their bases on the horizontal axis. Example the x-axis, and their frequencies on the vertical axis, y-axis. They also have their rectangles at the centre of the class Mark of each interval. The height of each rectangle represents the magnitude of the data lying within each class interval. The areas of the rectangles are proportional to the class frequencies. In drawing a histogram there is no gap or space between two bars unlike the bar chart.

8. Frequency Distribution

Frequency distribution refers to the arrangement of data or information in tabular form to reflect their frequencies foodstuff frequency refers to the number of times a particular event or information is usually used when data presented are large are most of the numbers may appear more than once.

9. Measure Of Central Tendency

Measure of Central tendency also called measure of location is the statistical information that gives the middle or Centre or average of a set of data. They are all regarded as forms of averages. There are five measures of Central tendency, they are:
i. Arithmetic mean
ii. Median
iii. Mode
iv. Geometric mean
v. Harmonic mean

i. The Arithematic Mean:

The arithmetic mean also popularly referred to as the mean is the average of a series of figure or values. It is obtained by dividing the sum of this figures by the total number of the figures or values. It is also the average of a collection of observation. The arithmetic mean is the most popularly used measure of Central tendency.

ii. The Median:

The median is defined as an average which is the middle value when figures are arranged in order of magnitude. In an even distribution the median is the average of the two middle numbers. In other words the median of a distribution is the middle value when the observation are arranged in order of magnitude starting with either the smallest or the largest number. The median is therefore the value of the middle item.

iii. The Mode:

The mode can be defined as the most frequently occurring number in a set of numbers or data. In terms of the observation which is most popular. It is the most frequently occurring value in a distribution.

iv. Geometric Mean:

The geometric mean of a group of numbers is the Nth root of the product of the numbers. in other words it is derived from the set of N observations by taking the Nth root of the product of the numbers. It is denoted by letter G.

v. Harmonic Mean:

Harmonic mean refers today reciprocal of the arithmetic mean of the reciprocal of some given numbers. It could have numbers like X1,X2,X3…….Xn. The hadmonic mean is denoted by the letter H.

vi. Quadratic Mean:

Quadratic mean also known as the root mean Square refers to the square root of the arithmetic mean of their squares. The quadratic mean is represented by R.M.S.

10. The Range

The Range is defined as the difference between the maximum and the minimum values in a set of data full stop the rent is the simplest and the most straightforward measure of dispersion.

11. The Quartile

The quartile add values which divide a given distribution into four equal parts. The for a purpose of a quartile include:
1.First quartile Q1
2.Seconde quartile Q2
3.Third quartile Q3
4.Fourth quartile Q4

12. Mean Deviation

The mean deviation is the arithmetic mean of all absolute deviation from the mean. It represents the difference of all the values from the arithmetic mean divided by the number in a given data. The mean deviation is obtained by finding the sum of all the values of each deviation from the mean and then dividing by the numbers of values. The mean deviation is denoted by M.D.

13. Variance And Standard Deviation

The variance refers to the arithmetic mean of the squares of the deviation of the observation from the true mean. It is also referred to as they “mean squared deviation”.

The standard deviation on the other hand is the square root of the variance. Day standard deviation is also referred to as the “root-mean-square deviation”.