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Unformatted text preview: Statistics Review Economics uses statistics heavily in its research. Statistics is based on three concepts: 1. Central Tendency of a variable 2. Dispersion or Variance of a variable 3. Inter-relation of variables or Covariance Before we start, lets review a few concepts: A variable is a characteristic that can vary from item to item in a data set. A discrete variable is has a countable or limited number of values. A continuous variable is one that has an unlimited number of variables. If we are producing our own data, first we must collect it in some way by counting or using some measuring device. Next we have to decide how to organize our data. This can be done in number of ways: 1. Frequency distributions This is to organize the data items into a more compact form by grouping it into a relatively small number of classes. We usually start by arraying the data observations from smallest to highest and then choose our classes. We need to decide the number of classes, the width of classes and the frequency in each class. We need to include all the data into our classifications and it is desirable to have the classes the same width. However sometimes the top and bottom classes must be open-ended. 2. The frequency distributions are often put into the form of a histogram which will give us the shape of the data. Once this has been done, we can begin to analyze its characteristics. Central tendency is a measure of what the centre or middle of the histogram or data array is. It is an average. The most common measures of...
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- Winter '11