The basic tools for economic analysis are used for the interpretation and analysis of some problems which are often presented in statements that may not be so easy to understand.
Some of the basic tools for Economic analysis include: Tables, Graphs, Charts, Mode, Mean, Median, standard deviation etc.
Let’s now explain the basic tools for economic analysis one after the other,
A table is a systematic and orderly arrangement of information, facts or data using rows and column for presentation. Tables make it easier for better understanding. Table is the most commonly used tool for analyzing information.
Characteristics of a Table
- A table must be simple
- A table must be easy to understand
- A table must be numbered if they are many
- It must have a title
- The source of information must should be stated if known
- The purpose of creating a table must be known
- A table must have a title or heading
- The sub headings for rows and column must be stated
Importance of Tables.
Tables are important in the following ways:
- A table helps data to be well arranged
- It helps to summarized the data presented
- A table helps to understand data
- It makes decision faster and easier
- It makes information easy to interpret
- A table helps to bring out important features in a the data
- A table eases comparison between different classes of data
A graph can be defined as a diagram showing a functional relationship between two variables. Examples of graphs are line graphs, pie graphs (or chart), bar chart, pictographs.
Features of Graph
- All graphs must have the source of the data presented
- All graphs must have a title
- It must be labeled properly for better understanding
- The X and Y axes of the graph must carry different variables
- It must possess appropriate scale
- All graphs should have X-axis on the horizontal and Y-axis on the vertical side.
- The unit of measurement must be indicated in the graph.
Importance of Graphs
- Graphs make it possible for changes in variables on quantities to be expressed
- It helps to show relationship between two variables
- Graphs provide basis for comparing variables provided in the table
- It helps to interpret value of variables
- It makes clearer and quicker impression about the information made on the table
LINE GRAPH: A line graph is a line used for data where emphasis is on continuous change, it is used to join or connect the highest and lowest points of a group.
PIE CHARTS (OR GRAPHS): The pie charts is usually measured either in percentage or in degrees with the aid of a mathematical device called a protractor, the entire circle is represented by 360 degree or 100%
Methods of Construction
- Add up the total figure of the product or value under consideration
- Work out the percentage or degree
- Draw a circle of a convenient size
- Divide the circles into sector
- Write the percentage or degree of each sector by it
BAR CHART: Bar chart is a graph made up of bars of rectangle which are of equal width and whose lengths are proportional to the quantities they represents. In bar chart there must be a space or gap between one bar and another. Types of bar chart are simple bar chart, component bar chat and multiple bar chat
PICTOGRAMS/ PICTOGRAPH: These are another type of graph in which pictures or drawings are used to represent items in a given data.
A pictogram showing the number of children with different types of fruit.
HISTOGRAMS: It is a graphical representation of frequency distribution. It is made up of a set of rectangles that have their bases on the horizontal axis i.e. X- axis and their frequencies on the vertical axis i.e. Y-axis. In drawing a histogram, there is no gap or space between two bars unlike the bar chart.