QUANTITATIVE REASONING-I

PROGRAM: BS EARLY CHILDHOOD CARE AND EDUCATION

(BS-ECCE)

Code: 8277 Unit 1–9

Early Childhood Education & Elementary Teacher Education Department

FACULTY OF EDUCATION
QUANTITATIVE REASONING-I
BS EARLY CHILDHOOD CARE AND EDUCATION
(BS-ECCE)

Code: 8277 Units: 1–9

Early Childhood Education & Elementary

Teacher Education Department
Faculty of Education
Allama Iqbal Open University
Islamabad
 DISCLAIMER

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but errors are possible. Please let us know of errors or failed links you discover.

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First Edition .......................................... 2024

Year of Printing..................................... 2025
Quantity................................................. 1000
Printer.................................................... AIOU-Printing Press, H-8, Islamabad
Publisher .............................................. Allama Iqbal Open University, Islamabad

ii
 COURSE TEAM

Dean: Prof. Dr. Fazal Ur Rahman

Chairman: Dr. Muhammad Athar Hussain

Course Development
Coordinator: Dr. Mubeshera Tufail

Unit Writer: Dr. Mubeshera Tufail

Reviewers: Dr. Farah Naz Makhdoom

Divisional Public School & Intermediate
College, Lahore

Ms. Nazish
GGHS Arhat Koroona, Mashogagar

Layout / Typeset by: Muhammad Hameed Zahid

Editor: Mr. Fazal Karim

iii
 FOREWORD

Welcome to this course on quantitative reasoning where we will unlock the power
of numbers and develop essential skills for making informed decisions in today's
data-driven world. Quantitative reasoning is not just about using numbers, it is also
about understanding them, interpreting them, and using them to solve real-world
problems. In this course, the fundamental principles of quantitative reasoning will
equip the students with the tools, which are needed to analyze data, identify patterns
and draw meaningful conclusions.

Throughout the course, students would learn to think critically, solve the problems,
communicate effectively, make informed decisions, navigate uncertainty, and
utilize tools and technology. These skills would involve developing a critical
mindset toward data and statistics, learning to question assumptions and evaluating
the validity of arguments based on numerical evidence. The problem-solving skill
involves tackling complex problems by breaking them down into manageable
components and applying quantitative techniques to analyze data and formulate
effective solutions. Effective communication deals with the art of communicating
quantitative information clearly and persuasively, whether through written reports,
presentations, or visualizations. Informed decision-making involves using
quantitative reasoning to make informed decisions in various contexts, from
personal finance to business strategy to public policy. Navigating the uncertainty
deals with understanding the role of uncertainty in quantitative analysis and
learning techniques for dealing with it such as probability theory and statistical
inference. Familiarity with common tools and technologies used in quantitative
analysis, such as spreadsheets, statistical software, and data visualization tools is
quite helpful in quantitative reasoning.

This course would guide you in a step-by-step manner for using quantitative
reasoning in diverse contexts. After completing this course, you would develop the
skills to identify the patterns in the data and draw meaningful insights from the
data. The skills developed through this course would not only be beneficial in your
academic and professional journey but it would be beneficial in the daily life
activities.

Prof. Dr. Fazal Ur Rahman

Dean, Faculty of Education

iv
 INTRODUCTION OF THE COURSE

In this course on Quantitative Reasoning-I, we embark on a journey to develop the

essential skills in understanding, interpreting, and analyzing quantitative
information. Quantitative reasoning is a fundamental aspect of problem-solving
across the various disciplines, from mathematics and science to social sciences and
beyond. It empowers individuals to make informed decisions, evaluate arguments,
and navigate complex real-world scenarios with confidence.

This course consists of nine units. Throughout this course, we will delve into key
concepts and techniques necessary for effective quantitative reasoning. Whether
you are a novice seeking to build a strong foundation or an adept learner looking to
refine your skills, this course is designed to accommodate learners at all levels of
proficiency.

The objectives of this course are as follows:

1. Building a solid understanding of basic mathematical principles and operations.
2. Developing critical thinking skills to interpret and evaluate quantitative data.
3. Exploring real-world applications of quantitative reasoning in diverse fields
such as finance, science, economics, and more.
4. Enhancing problem-solving abilities through practical exercises and case
studies.
5. Fostering a growth mindset towards quantitative reasoning, encouraging
curiosity, creativity, and resilience in tackling challenges.

Throughout the course, learning material, interactive lectures, hands-on activities,

and self-assessment questions will foster an engaging and dynamic learning
environment. After completing this course, you will be equipped with the tools and
confidence to approach quantitative problems with clarity, precision, and insight.

Dr Mubeshera Tufail
Course Coordinator

v
 OBJECTIVES OF THE COURSE

After the successful completion of the course, you would be able to:
1. Define the term quantitative reasoning.
2. Explain the components of quantitative reasoning.
3. Interpret the applications of quantitative reasoning in daily life.
4. Analyze real-world problems to identify the most suitable problem-solving
approach based on the nature of the problem and available resources.
5. Apply analytical problem-solving techniques to break down complex
problems into smaller, more manageable components, facilitating systematic
problem-solving processes.
6. Understand the fundamental concepts of numbers and their significance in
daily life.
7. Develop critical thinking and problem-solving abilities through numerical
reasoning and analysis.
8. Create and maintain a personal budget that reflects income, expenses, and
financial priorities.
9. Demonstrate proficiency in basic financial calculations, including calculating
interest, budgeting for expenses, and determining savings goals.
10. Develop a fundamental understanding of geometric concepts such as points,
lines, angles, and shapes.
11. Identify and classify different types of geometric figures, including polygons,
circles, and solids.
12. Demonstrate proficiency in measuring and calculating geometric properties,
such as length, area, perimeter, volume, and surface area.
13. Understand the fundamental concepts of sets, including elements, subsets,
unions, intersections, and complements.
14. Identify and analyze patterns in algebraic expressions, including variables,
constants, coefficients, and terms.

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15. Understand the fundamental characteristics of statistical studies, including
populations, samples, variables, and data collection methods.
16. Differentiate between the various types of statistical studies, including
observational studies, experiments, surveys, and retrospective studies.
17. Understand the fundamental concepts of descriptive statistics, including
measures of central tendency, variability, and distribution.
18. Calculate and interpret measures of central tendency, such as the mean,
median, and mode, to summarize the typical value of a dataset.
19. Understand the importance of data visualization and the role of tables and
graphs in organizing and summarizing data effectively.
20. Interpret tables to organize and present data in a clear and systematic manner.
21. Apply tables and graphs effectively to analyze and interpret data, identify
patterns and trends, and communicate findings to stakeholders or audiences
in a clear and concise manner.

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 TABLE OF CONTENTS

Page #
Foreword ........................................................................................................... iv

Introduction of the Course ................................................................................ v

Objectives of the Course ................................................................................... vi

Unit–1: Quantitative Reasoning ...................................................................... 1

Unit–2: Approaches to Problem Solving ........................................................ 13

Unit–3: Use of Numbers in Daily Life ............................................................ 37

Unit–4: Managing Money .............................................................................. 63

Unit–5: Fundamentals of Geometry ................................................................ 89

Unit–6: Sets and Algebraic Expressions ......................................................... 101

Unit–7: Introduction to Statistical Studies ...................................................... 117

Unit–8: Descriptive Statistics .......................................................................... 133

Unit–9: Using Tables & Graphs for Data ....................................................... 149

viii
Unit–1

QUANTITATIVE REASONING

Written by: Dr. Mubeshera Tufail

Reviewed by: Ms. Nazish

1
 INTRODUCTION

We encounter problems in daily life. These problems may involve various

characteristics, dimensions, shapes, qualities and quantities. In order to solve it
effectively, it is important to understand the nature of the problem and notice the
key information related to it. For example, it can be the income and expenses of a
person for the past month or the daily values of blood pressure of a patient for one
week, or the rate of Pakistani Rupee with respect to US Dollars in the past few
months. This information contains some evidence that may be useful to estimate
the nature of the problem, make a decision based on this information, or give a
reason for that pattern of values. For example, making a budget for a person for the
coming month for his/her income and expenses, advice from a doctor about the
health and diet of the patient, and estimating the value of the Pakistani Rupee for
the coming month. This information can be used to make decisions, and solve or
avoid a problem in the future.

The problems mentioned above either involve a quantity or a pattern of values over
a period of time. If a person can learn and use this information, she/he can be in a
position to make better decisions. Quantitative reasoning helps you to identify these
types of information and use it for decision-making. However, there are certain
misconceptions about quantitative reasoning that need to be addressed. For
example, Mathematics or quantitate reasoning is useful to only a certain group of
people or it is too difficult to learn. So, in this unit we will learn about the concept
of quantitative reasoning, the differences between Mathematics and quantitative
reasoning, and the diverse range of applications of quantitative reasoning in our
daily lives.

LEARNING OUTCOMES

After completing this unit, you will be able to:

1. Define the term quantitative reasoning.

2. Explain the components of quantitative reasoning.

3. Interpret the applications of quantitative reasoning in daily life.

4. Analyze the generally perceived misconceptions about Mathematics.

2
1.1 Defining Quantitative Reasoning
Quantitative reasoning involves the skill and ability to interpret and reason using
quantitative information. It involves the use of mathematical, statistical and logical
skills and knowledge to interpret data and draw conclusions. Working with
numbers and basic calculations is an important part of literacy. Literacy involves
the ability to read, write, reason and work with numbers. The following definitions
would be helpful to explain the concept of quantitative reasoning.
 Quantitative literacy is an aggregate of skills, knowledge, beliefs,
dispositions, habits of mind, communication capabilities and problem-solving
skills that people require to deal with situations involving numbers at the
workplace and in daily life (International Life Skills Survey, 2000).
 Quantitative reasoning is the application of mathematical concepts and skills
to solve real-world problems. It helps to read and understand quantitative
data, understand quantitative evidence and apply quantitative skills to solve
daily life problems (Hollins University, 2011).
 Numerical abilities equip students with the ability to understand and explain
the world in quantitative terms, interpret numerical data and evaluate
arguments relying on quantitative information and approaches (BYU
Quantitative Reasoning Foundation Document, 2003).
 Beyond arithmetic and geometry, quantitative literacy also involves logic,
data analysis and probability. It enables individuals to analyze data, read
graphs, understand arguments, detect logical fallacies, understand evidence
and evaluate risks. Quantitative literacy means knowing how to reason and
how to think (Kolata, 1997). (Mayes, Bonilla & Peterson, n.d.)
Although quantitative reasoning applies mathematical knowledge to solve real-
world problems, both are not the same, as shown in table 1.1 (Mayes, Bonilla &
Peterson, 2013).
Table 1.1: Contrast of Mathematics with Quantitative Reasoning-I
Mathematics Quantitative Reasoning
Power in abstraction Real, authentic context
Power in generality Specific, particular applications
Some context dependency Heavy context dependency
Society independent Society dependent
Apolitical Political
Methods and algorithms Ad hoc methods
Well-defined problems Ill-defined problems
Approximation Estimation is critical
Heavily disciplinary Interdisciplinary
Problem solutions Problem descriptions
Few practice opportunities outside the Many practice opportunities outside the
classroom classroom
Predictable Unpredictable
3
Mayes, Bonilla & Peterson (2013) have proposed a quantitative reasoning framework
with four components. It involves:
1. Quantification Act (QA): It is the process of conceptualizing the attribute of
an object so that the attribute is expressed using a unit measure.

2. Quantitative Literacy (QL): It involves the use of fundamental

mathematical concepts for describing, comparing, manipulating, and drawing
conclusions from variables developed in the quantification act.

3. Quantitative Interpretation (QI): It is the ability to use models to discover

trends and make predictions.

4. Quantitative Modeling (QM): Ability to create representations to explain a

phenomenon and to revise them based on fit to reality.

Figure 1.1. Quantitative Reasoning cycle

4
 Figure 1.2. Detail of Components of Quantitative Reasoning Framework

1.2 Applications of Quantitative Reasoning

Quantitative reasoning equips students with knowledge and skills, which can be
used in the academic field, workplace, career and daily life. The knowledge of
mathematical concepts plays a major role in enabling students to appreciate great
work in the fields of history, culture, arts, architecture, science, music, language
and literature. For example, the work of builders of the great city of Zimbabwe in
Africa, the ancient Egyptians and Greeks, and modern and classical music.

At the workplace, quantitative reasoning is a very demanding skill. The knowledge

and skills of using basic mathematical concepts play a positive role in seeking good
career opportunities. As it helps to perform job tasks, most of the occupations demand
a high level of language and mathematical skills. For example, chemical engineer,
lawyer, newspaper editor, mathematician, cardiologist, weather forecaster,
primary/elementary/secondary school teacher, financial analyst, journalist, webpage
designer, corporate executive, salesman, travel agent, cook, corporate executive,
manager, poultry farmer, personnel manager, psychologist, toll collector and retail
store manager etc. The basic literacy skills include competence in handling arithmetic
operations and solving day-to-day problems involving numbers and shapes.
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1.3 Misconceptions about Mathematics
Keeping in view the importance of mathematical knowledge in quantitative
reasoning, it is essential for a student to learn about it. Mathematics is often
perceived as a dry, difficulty and/or boring subject. The attitude of students towards
mathematics is affected by their perception of mathematics. The reason for this
perception may be based on misconceptions about mathematics. In this section, we
are looking at some misconceptions about mathematics.

1.3.1 Misconception 1: Mathematics Requires a Special Brain

One misconception about mathematics is that there are some special abilities
required to learn mathematics. The reality is that everyone can learn mathematics
just any other subject or skill such as learning to read or playing hockey. It requires
hard work, self-confidence, self-efficacy and consistency. Individual differences
among people affect their learning of a skill or subject. Therefore, different people
learn mathematics at different rates and in different ways. For example, some
people learn by concentrating on concrete problems, others by thinking visually,
and still others by thinking abstractly. The learning style of a person may differ
from others but s/he can still learn and succeed in mathematics.

1.3.2 Misconception 2: Mathematics in the Context of Modern Issues is Very

Complex
Learning mathematics involves solving problems. Misconception two is that
advanced mathematical concepts are too complex for an average person to
understand. It is true that only a few people receive advanced training in a field
such as mathematics, chemistry, music, and professional writing, however, most
people can learn basic mathematical concepts to such an extent that they can
understand complex issues and make reasonable informed decisions about them.
The emphasis here is on learning the concepts, not mastering the advanced skills.
For example, it takes a lot of training, study and hard work to become a professional
writer, but most people can read a book or write a few sentences. Mathematics is
no different. You can learn about mathematical concepts to such an extent that you
can make daily life decisions based on available data or information.

1.3.3 Misconception 3: Mathematics Makes you Less Sensitive

Some people believe that learning mathematics will somehow make them less
sensitive to the aesthetic aspects of life. However, understanding the mathematics
that explains the colors of a sunset or the geometric design in a work of art can
helpful to observe and appreciate it. Furthermore, many people find beauty and
elegance in mathematics itself. People trained in mathematics have made important
contributions to art, music, architecture and many other fields.
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1.3.4 Misconception 4: Mathematics do not have a Room for Creativity
Some of the facts, formalisms, and skills required for mathematical proficiency are dry,
but using these mathematical tools takes creativity. For example, consider designing
and building a home. The task demands specific skills to lay the foundation, frame in
the structure, install plumbing and wiring, and paint walls. But creativity is needed in
building the home to develop the architectural design, and respond to on-the-spot
problems during construction, and constraints based on budgets and building codes.
The mathematical skills learned in school are like the skills of carpentry, plumbing or
other technical skills. Applying mathematics is like the creative process of building a
home. So, we can say that mathematics has room for creativity.

1.3.5 Misconception 5: Mathematics Provides Exact Answers

A mathematical formula yields a specific result as you solve a given problem in
school. It would be marked a right or wrong. But in real life, mathematics involves
more than just using a formula; it involves the understanding of given data, its
context, and possible factors which may affect it. So, in real life, when you use
mathematics, answers are never so and clear-cut. For example,

A bank offers simple interest of 3%, paid at the end of one year (that is, after one
year the bank pays you 3% of your account balance). If you deposit $1000 today
and make no further deposits or withdrawals, how much will you have in your
account after one year?

A straight mathematical calculation seems enough: 3% of Rs. 1000/- is Rs. 30/- so,
you should have $1030 at the end of a year. However other factors must be
considered while calculating the exact amount. For example, to what extent, will
your balance be affected by service charges or taxes on interest earned? What if the
bank fails? What if the currency is devalued during this time? Choosing a bank for
investing your money is a real mathematics problem that may not involve a simple
or definitive solution.

1.3.6 Misconception 6: Math is Irrelevant to My Life

No matter what your path in college, career, and life, you will find mathematics
involved in many ways. A major goal of this text is to show you hundreds of
examples in which mathematics applies to everyone’s life. We hope you will find
that mathematics is not only relevant but also interesting and enjoyable.

1.3.7 Misconception 7: It’s OK if I am not Ggood at “Math”

Mathematics underlies nearly everything in modern society from the daily financial
decisions that all of us must make to the way in which we understand and approach
global issues of the economy, politics, and science. We cannot possibly hope to act

7
wisely if we approach mathematical ideas with a poor attitude. Moreover, it’s an
attitude that can easily spread to others. After all, if a child hears a respected adult
saying that he or she is “bad at math,” the child may be less inspired to do well.

So, think about your own attitudes toward mathematics. With a good attitude and
some hard work, by the end of your course, you will not only be better at math, but
you will be helping future generations by making it socially unacceptable for
anyone to be “bad at math.”

1.4 Introduction to Mathematics and Its Branches

The word mathematics is derived from the Greek word cmathematics which means
“inclined to learn.” Mathematics is about being curious, open-minded, and
interested in always learning more. There are three different ways to look at
Mathematics (1) as the sum of its branches (2) as a way to model the world, and
(3) as a language.

1.4.1 Mathematics as the Sum of Its Branches

The common branches of mathematics are given below:
i. Logic: The study of principles of reasoning
ii. Arithmetic: Methods for operating on numbers
iii. Algebra: Methods for working with unknown quantities
iv. Geometry: The study of size and shape
v. Trigonometry: The study of triangles and their uses
vi. Probability: The study of chance
vii. Statistics: Methods for analyzing data
viii. Calculus: The study of quantities that change

The branches of Mathematics are itself a comprehensive and abstract body of

knowledge. However, in this course, we will focus on the use of Mathematics and
its branches in quantitative thinking and critical reasoning.

1.4.2 Mathematics as a Way to Model the World

Mathematics can be used to create models and to view the patterns in a real
phenomenon. For example, an ice-cream company keeps track of the quantity of
various flavors of ice creams sold in the summer season based on previous sales.
The weather forecast and physical health facilities available for the public are two
other examples where mathematical models can be helpful to understand, represent
and forecast events. Mathematical models are used in various disciplines to
understand and solve problems.

8
 Business
Management

Psychology Economics
Sociology

Medicine Mathematical
Engineering
Physiology Modeling

Physics Biology
Chemistry Ecology

Computer Science
Artificial Intelligence

Figure 1.3. Use of Mathematical Modeling in various disciplines

1.4.3 Mathematics as a Language
Mathematics, as a language, has its own vocabulary and grammar. Learning the
language of Mathematics is help for using it in daily life to understand and solve
problems. Just like in a language, different degrees of competencies are possible.
Getting familiarity with the mathematical language will be helpful to lean
Mathematics. From this point of view, quantitative literacy is the level of
competency to use mathematical vocabulary and concepts for working successfully
in daily life. Table 1.2 compares ‘learning the language of Mathematics’ to
‘learning a language’.

Table 1.2: ‘Learning a Language’ vs ‘Learning the Language of Mathematics’

S Learning a Language Learning the language of
# Mathematics
1. Learn many styles of speaking and Learn techniques from many
writing, such as essays, poetry, and branches of mathematics, such as
drama, and reading skill. arithmetic, algebra, and geometry.

2. Place literature in context through Place mathematics in context through

the history and social conditions its history, purposes, and
under which it was created. applications.
3. Learn the elements of language such Learn the elements of mathematics
as words, parts of speech (nouns, such as numbers, variables, and
verbs, etc.), and rules of grammar operations and practice using them to
and practice their proper use. solve simple problems.
9
 4. Critically analyze language in Critically analyze quantitative
forms such as novels, short stories, information in mathematical models,
essays, poems, speeches, and statistical studies, economic forecasts,
debates. investment strategies, and more.
5. Use language creatively for various Use mathematics creatively to solve
purposes such as writing a term problems and to understand issues in
paper, application, story or the modern world.
engaging in a debate

SUMMARY
In this unit, we learned about the basic concept of quantitative reasoning, the
difference between Mathematics and quantitative reasoning and misconceptions
about Mathematics. Quantitative reasoning involves the knowledge, skills and
dispositions to read and interpret the numerical data and use it for solving daily life
problems. Mathematics can be regarded as a language learning process where you
get familiar with certain operations and concepts so that you can use it for the
communication of information. Quantitative reasoning is different from
Mathematics because it involves the use of mathematical principles for
understanding and dealing with daily life ill-defined problems. It also involves the
context-based applications of mathematical principles and logic to the problems
faced in the society. Its applications cover every aspect of life from academic life,
to the workplace and daily life. Therefore, quantitative reasoning is a very
important course for every member of the society for the effective and efficient
decision-making process in daily life.

EXERCISES
Multiple Choice Questions
1. What is the primary goal of quantitative reasoning in daily life?
a) Solving complex mathematical problems
b) Making informed decisions based on data and numbers
c) Memorizing mathematical formulas
d) Conducting scientific research
2. Which of the following is an example of quantitative reasoning in daily life?
a) Writing a poem
b) Painting a picture
c) Baking cookies using a recipe
d) Singing a song

10
3. If you want to compare the prices of two similar products at the grocery store,
what quantitative reasoning skill would you use?
a) Addition
b) Subtraction
c) Multiplication
d) Comparison and estimation
4. In a recipe, if you need 1 cup of milk but only have a 1/2-cup measuring cup,
how many times would you need to fill the measuring cup to get 1 cup of milk?
a) 1 time
b) 2 times
c) 3 times
d) 4 times
5. Which of the following is an example of interpreting data in daily life?
a) Solving quadratic equations
b) Analyzing a weather forecast
c) Memorizing historical dates
d) Composing a piece of music
6. What is the primary benefit of quantitative reasoning in daily life?
a) Solving complex mathematical puzzles
b) Making logical decisions based on data and evidence
c) Avoiding all forms of mathematics
d) Engaging in creative activities without constraints

7. In which discipline mathematics is used to model and analyze physical

phenomena such as motion, energy, and forces?
a) Biology
b) Economics
c) Physics
d) History
8. In architecture and engineering, what mathematical branch is essential for
designing structures that can withstand various loads and stresses?
a) Trigonometry
b) Geometry
c) Calculus
d) Linear algebra
9. What is the primary distinction between quantitative reasoning and mathematics?
a) Quantitative reasoning is purely theoretical, while mathematics is practical.
b) Mathematics focuses on calculations and formulas, while quantitative
reasoning emphasizes critical thinking and problem solving.
c) Quantitative reasoning is a subset of mathematics.
d) Mathematics is limited to whole numbers, while quantitative reasoning
deals with fractions and decimals.

11
10. Which discipline heavily depends on mathematical concepts, such as differential
equations, for modeling and predicting climate patterns and weather phenomena?
a) Geography
b) Meteorology
c) Literature
d) Music theory

Short-Answer Questions
1. Define quantitative reasoning.
2. Why do we need to study the quantitative reasoning?
3. Explain the scope of quantitative reasoning.
4. What is the difference among quantitative literacy, quantitative reasoning and
numeracy?
5. What is the relationship between Mathematics and quantitative reasoning?

Subjective Questions
1. Explain the concept and importance of quantitative reasoning.
2. Discuss the scope of quantitative reasoning in our daily life activities.
3. What are the major misconceptions about Mathematics?

REFERENCES

Briggs, B.(2015). Using and Understanding Mathematics: A Quantitative Reasoning

Approach. USA: Pearson Education Inc.

Mayes, R. L., Peterson, F. & Bonilla, R. (2013). Quantitative Reasoning Learning.

Progressions for Environmental Science: Developing a Framework. Advancing

Education in Quantitative Literacy, 6(1). Article 4.

DOI:[Link]

Mayes, R., Bonilla,R. & Peterson, F. (n.d.). Quantitative Reasoning in Context.

Retrieved from [Link]
[Link]

The UNESCO Courier. (2023). Maths counts. Retrieved from

[Link] [Link]/ en/articles/maths-counts

12
Unit–2

APPROACHES TO
PROBLEM SOLVING

Written by: Dr. Mubeshera Tufail

Reviewed by: Ms. Nazish
13
 INTRODUCTION

Problem-solving is a fundamental skill that is essential in all aspects of life, from

everyday challenges to complex professional endeavors. In this unit, we will
explore various approaches to problem-solving, equipping you with the tools and
techniques necessary to tackle problems effectively and efficiently. Problem-
solving involves the systematic process of identifying, analyzing, and resolving
challenges or obstacles. It requires critical thinking, creativity, and perseverance to
navigate through the problem-solving process and arrive at viable solutions. By
understanding different problem-solving approaches, you will be better equipped
to approach problems with confidence and achieve successful outcomes.

In this unit, we will begin by examining the importance of problem-solving skills

in various contexts, including academic, professional, and personal settings. We
will explore the characteristics of effective problem solvers and identify strategies
for developing and honing your problem-solving abilities. Throughout this unit, we
will emphasize the importance of critical thinking and adaptability in problem-
solving. By developing a repertoire of problem-solving approaches and techniques,
you will be better prepared to navigate through the complexities of problem-solving
and overcome obstacles with confidence.

By the end of this unit, you will have gained a deeper understanding of problem-
solving approaches and acquired practical skills to apply them in various contexts.
Whether you are a student, professional, or lifelong learner, the ability to effectively
solve problems is a valuable skill that will serve you well in all aspects of your life.
So let us start our unit.

14
 LEARNING OUTCOMES

By completing this unit, you will be able to:

1. Define and differentiate between various problem-solving strategies
including analytical, algorithmic, heuristic, and creative approaches.
2. Analyze real-world problems to identify the most suitable problem-solving
approach based on the nature of the problem and available resources.
3. Apply analytical problem-solving techniques to break down complex
problems into smaller, more manageable components, facilitating systematic
problem-solving processes.
4. Implement algorithmic problem-solving methods to develop step-by-step
procedures for solving repetitive or structured problems efficiently.
5. Utilize heuristic problem-solving strategies to generate innovative solutions
in situations where traditional methods may be insufficient or impractical.
6. Foster creativity and lateral thinking skills through exercises and activities
designed to challenge conventional problem-solving paradigms.

15
Usually, we think that the mathematical problems involve only numbers and
symbols. But the mathematical problems that we encounter in other subject areas,
at the workplace, and in daily life are almost always posed in words. For example,
budgeting your expenses and income, and estimating the cost of travelling to your
workplace per month. How much amount of a medicine is prescribed by the doctor
for a patient? Which minimum quantity can be dangerous for the patient? What
happens to the sea level if all the ice melts in the Antarctica? It can be answered by
taking into account the total land area of Antarctica, the mean thickness of the ice
in Antarctica, the total surface area of the earth’s ocean, and the volume of water
resulting from the melting of the ice (volume of this water would be 5/6 times of
the original ice volume). These problems can give you an idea of simple and
complex problems in real life where mathematical knowledge is required to
understand ad solve the problem.

2.1 Working with Units

Numbers in our daily life represent the amount or quantity of an object, property or
something. For example, the number 2 can represent 2 hours, 2nd position in class,
2 rupees, 2 bananas, 2 books, 2 buses, 2 glasses etc. The words that describe what
we are measuring or counting such as books, rupees, hours, and position are called
the units associated with the number. The technique of working with units to solve
problems is called unit analysis (or dimensional analysis).

Units: Units of a quantity describe what that quantity measures or counts. For
example, gram, kilogram and pounds for weight, kilometers and miles for
distance, and hours, minutes and seconds for time.

Unit Analysis: Unit analysis is the process of working with units to help solve
problems.

Units provide context to the numbers. For example, “weight of apples is 5” does
not convey a clear meaning on whether it is about grams, pounds or kilograms.
Similarly, for a distance, we use miles or kilometers. Suppose a car covers 100
miles of distance in 2 hours, then what is the speed of the car per hour? We divide
the 100-mile distance driven by the 2 hours of time it took, showing the units as we
work.

100 mi ÷ 2 hr = 100 mi/2 hr

= 50 mi/hr [read as miles per hour]

16
 We notice three things here:
i. It is easy to do division or multiplication by writing the units with quantities.
ii. Final units are miles divided by hours which we read as miles per hour.
iii. We notice the abbreviating (short form) units ‘mi’ for miles and ‘hr’ for
hours. The abbreviating unit is the same for singular and plural. We use
‘mi’ for mile and miles, and ‘hr’ for hour and hours.

There are two important keywords “per” and “of” in mathematical problems. The
average speed example shows that the word ‘per’ hour (which means “for every”
hour) is a key word in mathematical problems because it tells us to divide. A second
important key word is off, which usually implies multiplication. For example, if
you buy 10 mangoes at a price of Rs. 8/- per mango, the total price you will pay is:
Rs.8 / 
10 mangoes ×  Rs.80 / 
mango

We notice three important steps in this example:

i. We multiply we see the word “of”.
ii. We wrote the price of $2 per apple with division (as a fraction).
iii. Just as we may cancel a number that appears in the numerator and
denominator of a fraction, we may do the same cancellation of units.

[Note: in a fraction ‘10/2’, 10 is the numerator and 2 is the denominator.]

Self-Assessment Questions
1. What is the total distance travelled when a person takes 8 rounds of an 800-
meter-long track?

2. How many oranges are there in 25 boxes, if each box carries 30 oranges?

2.2 Common Fractions

A fraction can be expressed in three basic ways: as a common fraction such as 1,

as a fraction in decimal form such as 0.5, and as a percentage such as 50%.
Common fractions represent division and are written in the form a>b, where a and
b can be any numbers as long as b is not zero. The number on top is the numerator
and the number on the bottom is the denominator.
Numerator a
Denominator b

17
2.2.1 Adding and Subtracting Fractions
If two fractions have the same denominator (a common denominator), we can add
or subtract them by adding or subtracting their numerators. For example:
2 3 23 5
  
6 6 6 6

For subtracting or adding two fractions with different denominators, we must

rewrite the fractions with the same denominator before adding or subtracting. We
will get the same denominator by multiplying the denominators of both fractions.
For example,
2 1 2 1 3
   
3 2 6 6 6

Multiplying Fractions
To multiply fractions, we multiply the numerators and de- nominators separately.
For example:
3 1 3x1 3
x  
3 4 3x4 12

Sometimes we can simplify fractions at the same time we multiply them by

canceling terms that occur in both the numerator and the denominator. For example:
5 2 5x2 2
x  
3 5 3x5 3

2.2.2 Reciprocals and Division

Two (nonzero or numbers other zero) numbers are reciprocals if their product is 1.
For example:

Examples:
1 1 1
1) 3 and are reciprocals because 3x  3x  1
3 3 3

(Note: Integer has a denominator of 1, as shown in the case of integer “3”

in the above example)

2) 5 and 6 are reciprocals because 5 6

x 
5 6
x 1
6 5 6 5 6 5

18
The word integer originated from the Latin word “Integer” which means whole or
intact. Integers are a special set of numbers comprising zero, positive numbers
and negative numbers.

Examples of Integers: – 1, -12, 6, 15.

The symbol ‘Z’ represents integers.

Z= {……-8,-7,-6, -5, -4, -3, -2, -1, 0, 1, 2, 3, 4, 5, 6, 7, 8,……}

If we have two fractions or one integer and one fraction with a ‘÷’ division sign
between them, we can replace division with a multiplication sign by inverting and
multiplying (this inverting of the fraction is called reciprocal). For example,
1 3
1) 9  9 x  27
3 1
7 2 7 5 7x5 35
2)   x  
3 5 3 2 3x2 6

Table 2.1: Summary of Rules for Fractions

S# Operation Detail of Rule
1. Addition/subtraction (in case of 4 2 4  2 6 4 2 42 2
the same denominator)    OR   
3 3 3 3 3 3 3 3
2. Multiplication (multiply 4 2 4x2 8
numerator with numerator and x  
denominator with denominator) 5 6 5 x 6 30
3. Division (invert and multiply) 2 5 2 7 2x7 14
  x  
3 7 3 5 3x5 15

2.3 Squares, Cubes and Hyphens

2.3.1 Square
To find the area of a room, multiply the length of the room by its width. For
example, if the length of the room is 16 feet (ft) and its width is 10 feet (ft), then
the area of the room will be:

16 ft × 10 ft = 160 ft × ft = 160 ft2

19
We write ft2 here because the unit of length and width is feet so we keep track of
both in the answer. If the area of a room is 160 ft2, it means that the floor of the
room can fit in 160 boxes of 1 ft2.

16 ft

10 ft
Area
= 16 ft X 10 ft
= 16 0 ft 2

2.3.2 Cubes
To calculate the volume of a room, multiply the length, width and height of the
room. If the room is 5 meters long, 4 meters wide and 3 meters high, the volume of
the room is 60 m3 (read as 60 cubic meters), as given below.
5 m × 4 m × 3 m = 60 m × m × m = 60 m3

2.3.3 Hyphens
Hyphen (-) is a key symbol that is written with units. For example, if you look at
the electricity bill, it will probably state electricity usage in units of “kilowatt-
hours”. The hyphen means multiplication. For example, if a fridge uses 0.5-kilowatt
energy for a time of 8 hours, its energy usage is:

0.5 kilowatt × 8 hr = 4 kilowatt × hr = 4 kilowatt-hr

(read as “kilowatt-hours”)

Self-Assessment Questions
1. If you purchase 5 liters of petrol for Rs. 3000/-, what is the price of 1 liter
of petrol? Or if the cost of 1 liter of petrol is Rs. 300/-, then what is the
price of 7 liters of petrol?
2. What is the volume of a box that is 7 inches (in) long, 5 inches wide and 6
inches tall? [‘in’ is used to represent inch.]
3. What is the area of a room that is 6 meters (m) long and 7 meters wide?
[‘m’ is used to represent meter.]

20
2.3.4 Unit Conversions
Many everyday problems require converting numbers from one unit to another,
such as from miles to kilometers or quarts to cups. As a simple example, suppose
we want to convert 2 feet to inches. Because 1 foot is the same as 12 inches, we do
the conversion as follows:

2 ft = 2 ft × 12 in = 24 in
1 ft

Because 12 in = 1 ft

Notice that 12 inches and 1 foot are equal. This idea extends to all unit conversions,
which always require an appropriate way of multiplying by 1 so we do not change
the meaning of the original expression. For example, the following are all different
ways of writing 1:

1= 1 = 8 = ¼ = 1 kilogram = 1 week = 12 inches

1 8 ¼ 1000 grams 7 days 1 foot

We can denote the conversion of units in three ways:

12 in = 1 ft or 12 in = 1 or 1 ft = 1
1 ft 12 in

Self-Assessment Questions
1. Convert a length of 27 inches into feet.
2. A box is 3 feet long. What is its length in inches?

2.4 Decimal Fractions

For a fraction in decimal form, each digit corresponds to a certain place value,
which is always a power of 10 (such as 10, 100, 1000…). The following example
shows values for the decimal places in the number 3.141.
3 . 1 4 1

Unit Decimal point tenths hundredths thousandths

‫اکائی‬ ‫اعشاریہ‬ ‫دہائی‬ ‫سیکڑا‬ ‫ہزار‬

21
2.4.1 Converting Decimal Fraction to Common Form
Converting a fraction from decimal to common form requires recognizing the value
of the last digit in the decimal. For example:
1. 0.6 = 6
10
2. 5.67 = 567
100
3. 0.056 = 576
1000

2.4.2 Converting Common Fraction to Decimal Form

To convert a common fraction into decimal form, we perform the division implied
by the fraction. For example:
1 3 1
1.  0.5 2.  0.6 3.  0.14285714
2 5 7

In daily life, we round off the repeated numbers after decimal such as in the example
(3), we can write it as 0.14.

2.5 International Metric System and Metric Conversion

The international metric system was invented in France late in the 18th century for
two primary reasons: (1) to replace many customary units with just a few basic
units and (2) to simplify conversions through the use of a decimal (base 10) system.

The basic units of length, mass, time, and volume in the metric system are:
 meter for length, abbreviated m
 kilogram for mass, abbreviated kg
 second for time, abbreviated s
 liter for volume, abbreviated L

These basic units can be combined with a prefix that indicates multiplication by a
power of 10. For example, kilo means 1000 so a kilometer is 1000 meters, and
micro means one-millionth so a microgram is a millionth of a gram. Figure 2.1 lists
common metric prefixes.

Figure 2.2 lists common metric conversion values which can be helpful in daily life
activities.

22
 Figure 2.1. Common Metric Prefix

Figure 2.2. Common metric conversions

Another important set of standardized units are the units we use to measure
temperature. Three commonly used temperature scales are:
i. The Fahrenheit scale, commonly used in the United States, is defined so water
freezes at 32°F and boils at 212°F.
ii. The rest of the world uses the Celsius scale, which places the freezing point
of water at 0°C and the boiling point at 100°C.
iii. For the measurement of temperature, we use the Kelvin scale, which is the same
as the Celsius scale except for its zero point, which corresponds to -273.15°C.
A temperature of 0 K is known as absolute zero, because it is the coldest
possible temperature. (The degree symbol [°] is not used on the Kelvin scale.

23
The following figure 2.3 guides us about the conversion of value from one unit to
the other unit of temperature.

For metric or unit conversion, you can try to use MS Excel or Google. In MS Excel,
there is a function CONVERT by entering the number along with the correct unit
abbreviations in quotes. Google can also give you the exact answer when you type
what you want to convert into the Google search box.

Microsoft Excel

24
Google search

Figure 2.3 Metric or unit conversion through excel and Google search

Interesting Information
There are standardized units for measuring various properties such as length,
volume and weight. The image given below showed the units according to the
US customary system of measurement.

25
2.6 Powers of 10

Powers of 10 indicate how many times to multiply 10 by itself. For example:

102 = 10 ×10 = 100
106 = 10 × 10 × 10 ×10 × 10 ×10 = 1,000,000

Negative powers indicate reciprocals of corresponding positive powers. For example:

1 1
10 2 2   0.01
10 100
1 1
10 6 6   0.000001
10 1,000 ,000
Notice that powers of 10 follow five basic rules:
1. A positive exponent tells how many 0s follow the 1. For example, 100 is a 1
followed by a number of 0s; 108 is a 1 followed by eight 0s.
2. A negative exponent tells how many places are to the right of the decimal point,
including the 1. For example, 10-1 = 0.1 has one place to the right of the decimal
point; 10-6 = 0.000001 has six places to the right of the decimal point.
3. Multiplying powers of 10 simply requires adding exponents. For example:
104 × 107 = 10,000 × 10,000,000 = 100,000,000,000
4. Dividing powers of 10 requires subtracting exponents. For example:
10 5
3
 100 ,000  1000  10 53  100
10

5. There is no shortcut for adding or subtracting powers of 10. The values must
be written in longhand notation. For example:
106 + 102 = 1,000,000 + 100 = 1,000,100
108 + 10-3 = 100,000,000 + 0.001 = 100,000,000.001
106 – 103 = 10,000,000 - 1000 = 9,999,000

6. There is no shortcut for adding or subtracting powers of 10. The values must
be written in longhand notation. For example:
106 + 102 = 1,000,000 + 100 = 1,000,100
108 + 10-3 = 100,000,000 + 0.001 = 100,000,000.001
106 – 103 = 10,000,000 - 1000 = 9,999,000

26
2.7 Currency Conversions

While travelling or making some payments outside the country, we need to convert
one country’s money or currency to another country’s currency. C To convert the
currency, you must know the exact exchange rates for that currency. If we want to
convert $5000 US Dollars (USD) to PKR (Pakistani Rupee), we must know about
the exchange rate from 1 USD = how many PKR. Suppose that $1 USD is equal to
PKR 280/- for today, then $ 5000 USD = 5000×280 = PKR 1400000/-.

You can get the latest currency exchange rates by simply searching in the Google
search engine (as shown in figure 2.4). You can type the exact amount you want to
covert in the box in front of the currency (PKR or Euro) to get the exact exchange
amount in the other currency, as shown in the figure 2.5. However, the cost of
changing currency from one to another currency is affected by two factors: (i) the
exchange rate and (2) fees for the exchange. While the exchange rate may be more
or less the same in different shops for a given currency but the fee for the exchange
may vary. Many money changers charge a fee every time when you make an
exchange.

Figure 2.4. Currency exchange rate through Google search

27
 Figure 2.5. Calculation of Currency exchange rate through Google search

Self-Assessment Questions
1. The price of cereal is $20 USD. What is the price of cereal in Pakistani
Rupees?
2. A notebook costs $8 USD. What is the price of that notebook in euros?
3. The price of a diary is 2000 PKR (Pakistani Rupees).

2.8 Problem Solving with Units

Unit analysis gives us a way to make sure that answers to problems come out with
the units that we expect. The basic procedure in the unit analysis is given below:
1. Identify the units involved in the problem and the units that you expect for
the answer.
2. Use the given units and the expected answer units to help you find a strategy
for solving the problem. Be sure to perform all operations (such as
multiplication or division) on both the numbers and their associated units.

28
 [Remember, You cannot add or subtract numbers with different units, but you
can combine different units through multiplication, division, or raising
powers. (ii) It is easier to keep track of units if you replace division with
multiplication by the reciprocal. For example, instead of dividing by 60 s/min,
multiply by 1 min/60 s.
3. When you complete your calculations, make sure that your answer has.

Example
Problem: A car travels 25 miles every half-hour. How fast is it going?

Solution
Step 1. The “how fast” suggests that the final answer should be speed. Because the
given units are miles and hours, we expect a speed in miles per hour.

Step 2. Recalling that per means divided by, the fact that we are looking for a speed
in miles per hour tells us that we should divide the distance traveled by the
time it takes.

25 mi ÷ 0.5 hr = 25 mi ÷ 1 hr = 25 mi × 2 hr = 50 mi/hour
2 1

Step 3. We have found that the car travels at a speed of 50 miles per hour. The
answer has the units we expect. It gives us confidence that we approached
the problem correctly.

Self-Assessment Question
You are buying 12 acres of land at a rate of Rs. 2,00,000/- per acre. What is the
total cost of land?

2.9 Problem-Solving Process

There are four steps to solving a problem.
Step-1. Understand the problem. Be sure that you understand the nature of the
problem. For example:
• Think about the context of the problem (that is, how it relates to other
problems in the real world) to gain insight into its purpose.
• Make a list or table of the specific information given in the problem,
including units for numerical data.
• Draw a picture or diagram to help you make sense of the problem.

29
 • Restate the problem in different ways to clarify its question.
• Make a mental or written model of the solution, into which you can
insert details as you work through the problem.

Step-2: Devise a strategy for solving the problem. Finding an appropriate strategy
requires creativity, organization, and experience. In seeking a strategy, try any
or all of the following:
 Obtain needed information that is not provided in the problem
statement, using recall, estimation, or research.
 Make a list of possible strategies and hints that will help you select your
overall strategy.
 Map out your strategy with a flow chart or diagram.

Step-3: Carry out your strategy, and revise it if necessary. In this step, you are likely
to use analytical and computational tools. As you work through the
mathematical details of the problem, be sure to do the following:
 Keep an organized, neat, and written record of your work, which will be
helpful if you later need to review your solution.
 Double-check each step so you do not risk carrying errors through to the
end of your solution.
 Constantly reevaluate your strategy as you work. If you find a flaw in
your strategy, return to step 2 and create a revised strategy.

Step-4: Look back to check, interpret, and explain your result. Although you may
be tempted to think you have finished after you find a result in step 3, this
final step is the most important.

After all, a result is useless if it is wrong or misinterpreted or cannot be explained

to others. Always do all of the following:
 Be sure that your result makes sense. For example, be sure that it has the
expected units, that its numerical value is sensible, and that it is a reasonable
answer to the original problem.
 Once you are sure that your result is reasonable, recheck your calculations or
find an independent way of checking the result.
 Identify and understand potential sources of uncertainty in your result.
 Write your solution clearly and concisely, including a discussion of any
relevant uncertainties or assumptions.
 Consider and discuss any pertinent implications of your result.

30
2.10 Guidelines for Solving Problems

While every problem is different, the process of problem solving has a few common
features. In this section, we will examine eight general hints about problem solving.

Hint 1: There may be More than one Answer.

Most people recognize that policy questions do not have unique answers, but the
same is true of many mathematical problems. For example, both x = 4 and x = -4.
For example, how can we reduce the total amount of greenhouse gases emitted into
the atmosphere? Or how can we control environmental pollution? These questions
do not require a simple single answer. There are a number of strategies which may
contribute to the strategy of solving this problem.

Hint 2: There may be More than one Strategy

Just as there may be more than one right answer, there may be more than one
strategy for finding an answer. But not all strategies are equally efficient. As the
following example illustrates, an efficient strategy can save a lot of time and work.

Hint 3: Use Appropriate Tools

You do not need a computer to check your tab in a restaurant, but you would not
want to use an abacus to do your income tax. For any given task, there is an
appropriate level of power that is needed, and it is a matter of style and efficiency
neither to underestimate nor to overestimate that level. You usually will have a
choice of tools to use in any problem. Choosing the tools most suited to the job will
make your task much easier.

Hint 4: Consider Simpler, Similar Problems

Sometimes you are confronted with a problem that at first seems daunting. Our
fourth hint is to consider a simpler, but similar, problem. The insight gained from
solving the easier problem may help you understand the original problem.

Hint 5: Consider Equivalent Problems with Simpler Solutions

Replacing a problem with a similar, simpler problem can reveal essential insights
about a problem, as we have just seen. However, “similar” is not good enough when
we need a numerical answer. In that case, a useful approach to a difficult problem
is to look for an equivalent problem. An equivalent problem will have the same
numerical answer but may be easier to solve.

Hint 6: Approximations can be Useful

Another useful strategy is to make problems easier by using approximations. Most
real problems involve approximate numbers, to begin with, so an approximation
31
often is good enough for a final answer. In other cases, an approximation will reveal
the essential character of a problem, making it easier to reach an exact solution.
Approximations also provide a useful check: If you come up with an “exact
solution” that is not close to the approximate one, something may have gone wrong.

Hint 7: Try Alternative Patterns of Thought

Try to avoid rigid patterns of thought that tend to suggest the same ideas and
methods over and over again. Instead, approach every problem with an openness
that allows innovative ideas to percolate. In its most wondrous form, this approach
is typified by what Martin Gardner (1914– 2010), a well-known popularizer of
mathematics, called aha! problems. These are the problems whose best solution
involves a penetrating insight that reduces the problem to its essential parts.

Hint 8: Do not spin Your Wheels

Often the best strategy in problem solving is to put a problem aside for a few hours
or days. You may be amazed at what you see (and what you overlooked) when you
return to it.

Self-Assessment Questions
1. It takes you 30 seconds to walk from the first (ground) floor of a building
to the third floor. How long will it take to walk from the first floor to the
sixth floor (at the same pace, assuming that all floors have the same height)?
2. A woman bought a horse for Rs. 50,000/- and then sold it for Rs. 60,000/.
She bought it back for Rs. 70,000/- and then sold it again for Rs. 80,000/.
How much did she gain or lose on these transactions?

SUMMARY
Throughout this unit, we have delved into various problem-solving approaches,
equipping ourselves with the tools and techniques necessary to tackle challenges
effectively and efficiently. In this unit, we have gone through the unit conversion
methods, and solved the daily life problems through mathematical conversions of
units and quantities. While it is important to understand the nature of the problem
before we effectively solve it, it is also very important to follow the problem solving
process and hints to get the best solution for the given problem.

Problem-solving is a critical skill that transcends all aspects of life, from academic
and professional pursuits to personal endeavors. By understanding different
problem-solving approaches and strategies, we have empowered ourselves to
approach problems with confidence, creativity, and adaptability. By exploring
analytical, creative, and systematic problem-solving approaches, we have

32
broadened our problem-solving toolkit, enabling us to adapt our strategies to
different types of problems and situations. We have embraced the importance of
flexibility and adaptability in problem-solving, recognizing that there is no one-
size-fits-all approach and that success often requires a willingness to explore
multiple avenues and perspectives. As we move forward, let us carry forward the
knowledge and skills gained from this unit, recognizing the importance of problem-
solving in all aspects of our lives.

EXERCISES
Multiple Choice Questions
1. What is the reciprocal of 5/6?
a) 5/6
b) 6/5
c) 1/5
d) 6
Answer: b) 6/5

2. If 1 kg = 1000 grams, how many grams are there in 2.5 kg?

a) 1500 grams
b) 2000 grams
c) 2500 grams
d) 3000 grams
Answer: c) 2500 grams

3. How many weeks are there in 35 days?

a) 4 weeks
b) 5 weeks
c) 6 weeks
d) 7 weeks
Answer: b) 5 weeks

4. What is the area of a square with a side length of 4 inches?

a) 8 square inches
b) 12 square inches
c) 16 square inches
d) 20 square inches
Answer: c) 16 square inches

33
5. Convert 2.75 to a common fraction.
a) 11/4
b) 13/4
c) 22/7
d) 25/4
Answer: b) 11/4

6. 1 USD is equal to 280 PKR. How much is 10 USD in PKR?

a) 280 PKR
b) 2800 PKR
c) 3000 PKR
d) 3200 PKR
Answer: b) 2800 PKR

7. What is 10 to the power of 3 (10³)?

a) 100
b) 1000
c) 10000
d) 100000
Answer: b) 1000

8. Convert 72 inches to feet.

a) 6 ft
b) 8 ft
c) 10 ft
d) 12 ft
Answer: a) 6 ft

9. What is the volume of a cube with a side length of 3 meters?

a) 9 cubic meters
b) 18 cubic meters
c) 27 cubic meters
d) 36 cubic meters
Answer: c) 27 cubic meters

10. If 1 Euro = 320 PKR, how much is 5 Euros in PKR?

a) 1500 PKR
b) 1600 PKR
c) 1800 PKR
d) 2000 PKR
Answer: d) 2000 PKR

34
Short-Answer Questions
1. Define the term "reciprocal" with an example.
2. Convert 1.25 into a common fraction.
3. How many grams are there in 7.5 kilograms?
4. If a square has a side length of 8 cm, what is its area?
5. Convert 2500 grams to kilograms.
6. Write down the formula for converting days to weeks.
7. How do you calculate the area of a cube?
8. What is 100 USD in PKR if 1 USD = 280 PKR?
9. List three common units in the International Metric System.
10. Calculate the product of 3/5 × 2/7.

Subjective Questions
1. Solve the following:
a) Add 2/3 and 3/5.
b) Subtract 5/8 from 7/4.
c) Multiply 4/7 by 3/9 and simplify.
d) Divide 7/6 by 5/3.

2. A cube has a side length of 5 meters.

(a) Calculate the surface area of the cube.
(b) Calculate the volume of the cube.

3. Perform the following conversions:

a) Convert 8.5 kg to grams.
b) Convert 3.5 feet to inches.
c) Convert 120 hours into weeks and days.
d) Convert 0.875 into a fraction and simplify.

4. If a rectangle has a length of 6 inches and a width of 4 inches:

(a) Calculate the area of the rectangle.
(b) Convert the area into square feet.

5. A traveler has 200 Euros. If 1 Euro = 300 PKR, how much PKR will the
traveler have after converting? If they spend 20% of this amount on shopping,
how much money will be left?

35
6. Explain the concept of powers of 10 with examples for 10², 10³, and 10⁴. Then,
calculate the value of (10³ × 10²) ÷ 10.

7. A family plans to tile a square room with a side length of 12 feet. Each tile
measures 1 square foot and costs 300 PKR. Calculate:
a) The total number of tiles required.
b) The total cost of the tiles.
c) If the family has a budget of 45,000 PKR, will it be enough?

REFERENCES

Bennett, J. & Briggs, W. (2015). Using & Understanding Mathematics: A Quantitative

Reasoning Approach. Boston: Pearson.

De MesQuita, E. B. & Fowler, A. (2021). Thinking Clearly with Data: A Guide to

Quantitative Reasoning and Analysis. Princeton: Princeton University Press.

Aufmann, R. N., Lockwood, J.S., Nation, R. D. & Clegg, D. K. (2017). Mathematical

Thinking and Quantitative Reasoning. Boston: Houghton Mifflin Company.

Imai, K. (2017). Quantitative Social Science: An Introduction. Princeton: Princeton

University Press.

36
Unit–3

USE OF NUMBERS IN DAILY LIFE

Written by: Dr. Mubeshera Tufail

Reviewed by: Ms. Nazish

37
 INTRODUCTION

Numbers are an integral part of our daily lives, shaping the way we understand and
interact with the world around us. Numbers play a crucial role in various aspects of
our routine activities. Whether we are calculating time, measuring distances,
managing finances, or analyzing data, our reliance on numbers is evident in almost
every task we undertake.

In this unit, we will explore the significance of numbers in our daily lives and how
they serve as essential tools for communication, problem-solving, and decision-
making. By understanding the fundamental concepts of numbers and their
applications, we can gain a deeper appreciation for their role in shaping our
understanding of the world.

Through engaging activities, practical examples, and real-life scenarios, we will

delve into the diverse ways in which numbers influence our everyday experiences.
From basic arithmetic operations to more advanced mathematical concepts, we will
uncover the relevance of numbers in various contexts, including personal finance,
time management, and measurement.

By the end of this unit, students will not only develop a stronger grasp of numerical
concepts but also gain valuable skills that they can apply to navigate the
complexities of everyday life more effectively. So, let us embark on this journey to
explore the fascinating world of numbers and discover their profound impact on
our daily existence.

LEARNING OUTCOMES

After completing this unit, you would be able to:

1. Understand the fundamental concepts of numbers and their significance in

daily life.

2. Develop proficiency in basic arithmetic operations such as addition,

subtraction, multiplication, and division.

3. Apply numerical skills to solve practical problems encountered in everyday

scenarios, including time management, budgeting, and measurement.

38
4. Explore real-life applications of numbers in various fields, including finance,
science, and technology.

5. Enhance critical thinking and problem-solving abilities through numerical

reasoning and analysis.

6. Recognize the importance of accuracy and precision in numerical calculations

and measurements.

7. Cultivate an appreciation for the role of numbers in fostering effective

communication and decision-making.

8. Utilize technology and mathematical tools to facilitate numerical

computations and data analysis.

39
3.1 Percentage
Percent is expressing a quantity in the form of “divided by 100,” so the quantity (x)
expressed in percentage (%) form simply means the quantity divided by 100 i.e.,
x/100. For example, 10.4% means 10.4/100, or 0.104. Therefore, if 10.4% of
eighth-graders secured an A grade in the annual examination and there are 100,000
eighth-graders, then the number who secured an A grade, is 10.4% of 100,000, or:

10.4% ×100,000 = 0.104 ×100,000 = 10,400

Notice that the word “of” refers to multiply. We can see here that if 10.4% of
100,000 eighth graders secured an A grade then it means that there are 10,400
students with an A grade. The quantities in the media are frequently reported in
percentage form such as news related to sports, the stock market, inflation rate,
health etc.

3.2 Uses of Percentage

Percentage can be used in three different ways: as a fraction of a quantity,
percentage to describe a change in a quantity or characteristic and compare the
performance and cost between two products.

3.2.1 Using Percentage as Fraction

Percentage is just an alternative form of fractions (Unit 02, 2.4: Decimal
Fractions). For example, 2.6% of 13,000 employees in the manufacturing sector
lost their jobs.
2.6% ×13,000 = 0.026 ×13,000 = 338

Example:
An opinion poll finds that 65% of 1050 people surveyed said that they are
affected by the inflation. How many said that they were affected by the inflation?

Solution: Because of indicates multiplication, 65% of the 1069 respondents are:

65% × 1050 = 0.65 × 1050 = 682.5 ≈ 683

About 683 people said that they were affected by the inflation. We rounded the
answer to 683 to obtain a whole number of people. (The symbol ≈ is used to
denote quantities that are approximately equal.)

40
3.2.2 Using Percentage to Describe a Change
Percentages can be used to describe the change in a quantity over a certain period
of time. For example, there was a 2% increase in the value of market shares of a
multinational company in the last month. Another example is the increase in the
population of a city over a certain period of time. The population of the town was
100,000 in the 2010 census and 150,000 in the 2023 census. We can express the
change in population in two basic ways. As the population rose by 50,000 people
(from 100,000 to 150,000), we say that the absolute change in the population was
5000 people. Another way is the percentage. As the increase of 50,000 people was
50% of the starting population of 100,000, we say that the relative change in the
population was 50% or 0.5. (0.5 is 50/100= 0.5).
3.2.3 Using Percentage for Comparison
Percentage can be used to compare two numbers. For example, we can compare the
price of two phones or vehicles, and other features. The battery of ‘x’ phone lasts
125% longer than the ‘y’ phone, but it costs 150% more. If we compare the price
of Suzuki Alto (Rs. 2,200,000/-) and WagonR (Rs. 3,200,000/-), the WagonR is
Rs. 1,000,000/- more expensive than Suzuki Alto. This difference can be expressed
as given below:
3,200,000 – 2,200,000 = Rs. 1,000,000/-

This difference in the form of percentage of Suzuki Alto price is:

1,000 ,000
= 0.4545 = 45.45% ≈ 45%
2,000 ,000
In relative terms, the WagonR costs 45% more than Suzuki Alto.
In this example, we are comparing it to the price of the Suzuki Alto, therefore, the
Suzuki Alto is the reference value. Note that while reporting the difference, the
reference value comes after the word ‘than’ (please see the underlined text in the above
statement.). The WagonR price is the compared value. The absolute difference is the
actual difference between the compared value and the reference value:
Absolute difference = compared value - reference value
In the above example comparing the price of Suzuki Alto (Rs. 2,200,000/) and
WagonR (Rs. 3,200,000/-), the WagonR is Rs. 1,000,000/- more expensive than
Suzuki Alto (it is called absolute difference). The relative difference describes the
size of the absolute difference in comparison to the reference value and can be
expressed as a percentage:
Relative difference = compared value - reference value × 100
reference value
In the above example, the relative difference in the price of WagonR and Suzuki Alto
is 69%.

41
If we take the WagonR price as the reference value and the Suzuki Alto price as the
compared value, the absolute difference is given below:
2,200,000 - 3,200,000 = Rs. -1,000,000/-
The negative sign indicates that the Suzuki Alto price is Rs. 1,000,000/- less than
WagonR.
The relative difference in this case with the Suzuki Alto price as compared value is:
Compared value reference value
Relative difference  x 100
reference value
2,200,000 - 3,200,000
 x 100
3,200,000
- 1,000,000
 = –.3125 x 100
3,200,000
= - 31.25% ≈ -31%

The negative sign indicates that the Suzuki Alto price is 31% less than the WagonR.
In this way, we have two ways to express relative differences:
1. WagonR costs 45% more than Suzuki Alto.
2. Suzuki Alto's price is 31% less than the WagonR.

Both statements are correct. However, it is important to notice the compared and
reference values in the given examples.

Example: Comparison of Salary

The average pay of teachers is different in the public and private sectors. Data show
that the average pay of a government school teacher is 50,000/- per month and the
monthly pay of a private school teacher is 45,000/-. Compare average pay in private
schools to that in government schools in both absolute and relative terms.

Solution:
Based on the wording of the statement, we use the private school pay as the
compared value and the government school pay as the reference value.
Absolute difference = compared value - reference value
= 45,000 - 50,000
= Rs. - 5,000/-

42
 Relative difference = compared value - reference value × 100
reference value

= 45,000 – 50,000 × 100

50,000

compared value - reference value

=
reference value
= -.1 × 100

= - 10%
In absolute terms, the average pay in private schools was Rs. 5,000/- less than
the average pay in government schools. In relative terms, average pay in private
schools was about 10% less than average pay in government schools. (You can
verify that average pay in government schools was about 11% more than average
pay in private schools.)

3.2.4 Percentage of Percentages

You may have observed the change in a quantity when the quantity itself is a
percentage. For example, a bank increases its interest rate on a property loan from
4% to 5%. In absolute terms, the interest rate increased by 1%. The relative change
in the interest rate is 25%, as calculated below:
new value - reference value 5% - 4%
x 100% = x 100% = 25%
reference value 4%

Example
The percentage of adults who report reading books fell from about 69% in 2001
to 22% in 2023. Describe this change in book readership.
Solution
The drop in readership from 69% to 22% represents a decline of 69 - 22 = 47
percentage points. This is the absolute change in the percentage of adults who
read the books. The relative change in readership is:

new value - reference value 22% - 69%

x 100% = x 100% ≈ - 68%
reference value 69%
The negative sign indicates a decrease in readership. We say that readership
dropped by about 68% in relative terms or by 47 percentage points in absolute
terms.

43
3.3 Ratio
In the previous section, we learnt that we use absolute and relative differences for
comparing two quantities. Another way to compare is the ratio of the two quantities.
The quantities with the same unit can be compared and the answer of the ratio is
without units. For example, the ratio of two quantities Rs. 80,000/- and Rs. 20,000/- is:
80,000 4
 4
20,000 1
Here the unit of currency ‘Rupee’ is canceled at the top and bottom of the fraction.
The ratio between the two quantities is 4 to 1. The ratio of price of two mobiles
phones X1 (price of X1 is Rs. 50,000/-) and X2 (price of X2 is Rs. 25,000/-) is:
50,000 2
 2
25,000 1
We can say that the ratio of the price of X1 to X2 price is 2 to 1. We can also say that
the price of the X1 mobile phone is twice the price of the X2 mobile phone. It can be
stated that the ratio of X2 price to X1 price is 1 to 2 i.e., ½ or 0.50 0r 50%. Notice
here that the unit of currency ‘Rupee’ is canceled leaving the ration without units.

3.4 Abuses of Percentages

Percentages provide information for comparison and reference. However, there are
certain points which need to be considered while calculating and using percentages.

3.4.1 Notice Reference Values

By shifting the reference value, we can get different results. Therefore, be aware of
the reference values while calculating the percentage value. For example, because
of some financial losses faced by the company, you agree to accept a temporary
10% cut in your monthly salary. Your employer promises to give you a 10% pay
increase after six months. Will this pay raise restore your original salary?

We can answer this question by assuming some arbitrary number for your original
weekly pay, such as Rs. 20,000/-. A 10% pay cut means that your pay will decrease
by 10% of Rs. 20,000/-, or Rs. 2,000/-, so your weekly pay after the cut is
Rs. 20,000 - Rs. 2,000 = Rs. 18,000/-
The subsequent raise increases your pay by 10% of Rs. 18,000/-, or Rs.1,800/-,
making your weekly pay
Rs. 18,000 + Rs. 1,800 = Rs. 19,800/-

44
Notice that the 10% pay cut followed by the 10% pay raise leaves you with less
money than you started with. This result arises because the reference value for the
calculations shifted during the problem: It was Rs. 20,000/- in the first calculation
and Rs. 18,000/- in the second.

3.4.2 Less than Nothing

The word ‘percentage’ comes from two words: per and cent. It also means out of a
total of 100 parts, the value or portion of a particular quantity. For example, a
student “A” achieved 80% marks in the annual examination of class 9. It means
that if the total marks are 100, the student has achieved 80 marks. We can say that
it involves representing a percentage value out of 100. However, in real-world
situations, we often see numbers that represent large “more than” percentages. For
example, a price of Rs. 400/- is 300% more than a price of Rs. 100/-.

However, in most cases, it is not possible to have a “less than” percentage that is
“greater than 100%”. To understand the reason, consider an advertisement claiming
that replacing standard light bulbs with energy-efficient bulbs would use “200
percent less energy.” If you think about it, you will realize that such a savings is
impossible. If the new light bulbs used 100% less energy, they would be using no
energy at all. The only way they could use 200% less would be if they actually
produced energy. Clearly, whoever wrote the advertisement made a mistake. So, in
this example, the percentage value mentioned does not sound logical.

Let us consider another example. A store advertises that it will take “150% off” the
price of all products. What should happen when you go to the counter to buy a Rs.
500/- item? If the price were 100% off, the item would be free. So if the price is
150% off, the store should pay you half the item’s cost i.e., Rs. 250/-. More likely,
the store manager did not understand percentages.

Can a sportsman give 120% effort for a final match of Cricket? Can a glass of
orange juice have a 120% of the daily requirement for Vitamins? Now think about
these questions and write your answers.

3.4.3 Do not Average Percentages

As a general rule, you should never calculate the average of the percentages.
Because it may provide a misleading answer. Suppose you got 70% of the questions
correct on a midterm exam and 90% correct on the final exam. Can we conclude
that you answered 80% of all the questions correctly? It might seem convincing
apparently because, after all, 80% is the average (mean) of 70% and 90%. But it
would be wrong unless both tests happened to have the same number of questions.

45
Let us look at it in detail. Suppose that the midterm had 20 questions and the final
examination had 100 questions, making it 120 questions in total. Your 70% score
on the midterm means that you answered 14 questions correctly (i.e., 70/100×20=
14), while your 90% score on the final means you answered 90 questions correctly.
Therefore, on the two exams combined, you answered 104 (i.e., 14+90=104) out of
120 (i.e., 20+100= 120) questions correctly, which is 86.67%. This is much higher
than the 80% “average” of the two individual exam percentages.

In baseball, a player’s batting average represents the percentage of at-bats in which

he got a hit. For example, a batting average of .350 means the player got a hit 35%
of the times he batted. Suppose a player had a batting average of .200 during the
first half of the season and .400 during the second half of the season. Can we
conclude that his bat ting average for the entire season was .300 (the average of
.200 and .400)? Why or why not? Give an example that illustrates your reasoning.

The answer is no. For example, suppose he had 300 at-bats during the first half of
the season and 200 at-bats during the second-half, for a total of 500 at-bats. His
first-half batting average of .200 means he got hits on 20% of his 300 at-bats or
0.2 × 300 = 60 hits. His second-half batting average of .400 means he got hits on
40% of his 200 at-bats, or 0.4 × 200 = 80 hits. For the season, he got a total of
60 + 80 = 140 hits in his 500 at-bats, so his season batting average was 140>500=28%,
or .280—not the .300 found by averaging his first-half and second-half batting
percentages. (In fact, the only case in which his season average would be .300 is if
he had precisely the same number of at- bats in each half of the season.)

3.5 Large and Small Numbers

Large numbers like millions, billions, or trillions are common in our daily
discourse, whether in discussions about government expenditures or in various
technological contexts such as the storage capacity of phones and computers.
However, the true comprehension of the magnitude of these numbers is not
widespread. This section would explore several methods for providing a
meaningful perspective on large or small numbers.

3.5.1 Scientific Notation

When dealing with large and small numbers, employing scientific notation proves
to be a helpful technique. In this format, numbers are represented by a value
between 1 and 10, multiplied by a power of 10. For instance, considering a billion
as ten to the ninth power (109), we express 6 billion in scientific notation as 6×109.
Likewise, 420 can be written as 4.2×102 in scientific notation, and 0.67 as 6.7×10-1.
This approach facilitates a clearer understanding of the scale of numbers. The

46
power of 10 in these examples indicated the number of places the decimal place
moved from right to left for a positive value of power (i.e., 109) and left to right for
a negative value of power (10-1).
Scientific notation is a format in which a number is expressed as a number
between 1 and 10 multiplied by a power of 10
Scientific notation is a convenient way of representing numbers, especially large
numbers, regardless of their magnitude. However, it is crucial to exercise caution
and not let this ease of expression lead to misconceptions. As an illustration, the
simplicity with which we can write the number 1080 might make it seem
unremarkable, yet it surpasses the total count of atoms in the observable universe.

Examples
1) Total spending on education in the previous federal budget was
4,900,000,000,000. In scientific notation, it can be expressed as 4.9×1012.
2) The diameter of a hydrogen nucleus is about 0.000000000000001 meter. It
can be written as 1×10-15.

(a) Procedure of Converting to Scientific Notation

To convert a number from ordinary notation to scientific notation:
Step–1: Move the decimal point to come after the first non-zero digit on the left
side. (Note: For a quantity without a point, the point is present on the right
side at the end. For example, 264 can be written as 264.00.)
Step–2: For the power of 10, use the number of places the decimal point moves.
For example, the decimal points moved in the above mentioned quantity
(2.64) is; the power is positive if the decimal point moves to the left and
negative if it moves to the right.
Examples:
Decimal moves 3
5034 places to left 5.034 × 103
¬¬¬¬¬¬
Decimal moves
0.0024 places to the right 2.4 × 10-3
¬¬¬¬¬¬
Decimal moves2
(1.69×102) × 102 =
169 × 102 places to the left
1.69 ×104
¬¬¬¬¬¬

In the last example, the two places decimal moves were added into 102 for
expressing as one quantity.

47
(b) Procedure of Converting from Scientific Notation
To convert a number from scientific notation to ordinary notation:
Step–1: The power of 10 indicates how many places to move the decimal point; move
it to the right if the power of 10 is positive and to the left if it is negative.
Step–2: If moving the decimal point creates any open places, fill them with zeros.

For example,

8.06×103 Move decimal 2 places to 8060

the right
¬¬¬¬¬¬

2.8×105 Move decimal 5 places to 280000

the right
¬¬¬¬¬¬

3.8 × 10-4 Move decimal 4 places to 0.00038

the left
¬¬¬¬¬¬

(c) Addition and Subtraction with Scientific Notation

In general, we must write numbers in ordinary notation before adding or subtracting.
Examples are given below:

(6×103) + (4× 105) = 6,000 + 400,000

= 406,000
= 4.06 × 105

(14.2 × 103) + (51 × 104) = 14,200 + 510,000

= 524,200
= 5.24 × 105

When both numbers have the same power of 10, we can factor out the power of 10
first.
(4×108) + (8× 108) = (4 + 8) × 108
= 12 × 108
= 1.2 × 109

(5.6 × 10-25) + (3.8 × 10-25) = (5.6 + 3.8) × 10-25

= 9.4 × 10-25

48
(d) Multiplying or Dividing with Scientific Notation
Multiplying or dividing numbers in scientific notation simply requires two tasks:
(i) operating on the powers of 10 and
(ii) working with the other parts of the number, separately.
(2 × 102) × (6 ×104) = (2 × 6) × (102 × 104)
= 12 × 106
= 1.2 × 107
3.6 × 10-3 = 3.6 × 10-3
4.2 × 10-5 4.2 10-5
= 0.86 × 10-2 – (-5)
= 0.86 × 103
= 8.6 × 102

Self-Assessment Questions
1. Convert each of the following numbers from scientific to ordinary
notation. a. 2 × 106
i. 3 × 104
ii. 5.2 × 10-3
iii. 2.8 × 10-2
iv. 4.5 × 10-2
v. 6.45 × 10-5
2. Write the following numbers in scientific notation.
(i) 53829
(ii) 6784
(iii) 0.05674
(iv) 7893.56
(v) 452567
(vi) 568.00001
3. Solve the following problems and express the answer in scientific
notation. You ca round off your answer to one decimal place (e.g.,
3.2×103).
(i) (3 × 103) × (2 × 102)
(ii) (4 × 102) × (3 × 108)
(iii) (3 × 103) + (2 × 102)
(iv) (8 × 103) + (2 × 105)
(v) (7 × 108) ÷ (3 × 109)
(vi) (5 × 106) + (14 × 108)
(vii) (94× 105) ÷ (2× 103)
(viii) (8 × 1012) ÷ (4 × 104)

49
3.6 Significant Digits
The digits in a number that represent actual measurements are called significant
digits. For example, 132 pounds has 3 significant digits and implies a measurement
to the nearest pound, while 132.00 pounds has 5 significant digits and implies a
measurement to the nearest hundredth of a pound.

Note that zeros are significant when they represent actual measurements, but not
when they serve only to locate the decimal point. For example, when dealing with
measurements, 147 pounds and 147.00 pounds do not have the same meaning.
Writing weight as 147 pounds means to the nearest pound whereas 147.00 pounds
means to the nearest hundredth of a pound, rather than to the nearest pound. We
assume that the zeros in 147.00 pounds are significant until they represent an actual
measurement. In contrast, we assume that the zeros in 600 centimeters are not
significant, because they serve only to tell us that the decimal point comes to their
right. Rewriting 600 centimeters as 6 meters makes it easier to see that only the 6
is a significant digit.

The only subtlety in counting significant digits arises when we cannot be sure
whether zeros are truly significant. For example, suppose your professor states that
there are 200 students in your class. Without further information, you have no way
to know whether she means exactly 200 students or roughly 200. We can avoid this
kind of ambiguity by writing numbers in scientific notation. In that case, zeros
appear only when they are significant. For example, an enrollment of 2×102 implies
a measurement to the nearest hundred students, while 2.00×102 implies exactly 200
students.

Summary: When Digits are significant?

Type of Digit Significance
Nonzero digits Always significant
Zeros that follow a nonzero digit and lie to the
Always significant
right of the decimal point (as in 5.80 or 5.00)
Zeros between nonzero digits (as in 3006 or
4.008) or other significant zeros (such as the first Always significant
zero in 60.0)
Zeros to the left of the first nonzero digit (as in
Never significant
0.003 or 0.00068)
Zeros to the right of the last nonzero digit but Not significant unless
before the decimal point (as in 20,000 or 410) stated otherwise

50
3.6.1 Rounding
Rounding means making a number simpler but keeping its value close to what it
was. For example, 73 rounded to the nearest ten is 70, because 73 is closer to 70.
Similarly, 76 goes up to 80 because it is close to 80. The result is less accurate, but
easier to use. The basic process of rounding numbers takes just two steps.
Step–1: Decide which decimal place (e.g., tens, ones, tenths, or hundredths) is the
smallest that should be kept.
Step–2: Look at the number in the next place to the right (for example, if rounding
to tenths, look at hundredths). If the value in the next place is less than 5,
round down; if it is 5 or greater, round up.

For example, the number 382.2593 is given to the nearest ten-thousandth. It can be
rounded in the following ways:
 382.2593 rounded to the nearest thousandth is 382.259.
 382.2593 rounded to the nearest hundredth is 382.26.
 382.2593 rounded to the nearest tenth is 382.3.
 382.2593 rounded to the nearest one is 382.
 382.2593 rounded to the nearest ten is 380.
 382.2593 rounded to the nearest hundred is 400.

3.6.2 Rounding with Significant Digits

For each of the following operations, give your answer with the specified number
of significant digits.
a. Solve the problem and give your answer with 2 significant digits.
7.7 mm × 9.92 mm
7.7 mm × 9.92 mm = 76.384 mm2 = 76 mm2

Because we are asked to give the answer with 2 significant digits, we round
to 76 mm2.

b. Solve the problem and give your answer with 4 significant digits.
240,000 × 72,106
240,000 × 72,106 = 1.730544 × 1010 = 1.731×1010

Because we are asked to give the answer with 4 significant digits, we round
to 1.731×1010.

51
 Self-Assessment Questions
State the number of significant digits and the implied meaning of the following
numbers.
a) 13.40 seconds (time)
b) Length of 0.000067 meter (length)
c) 0.0030 gram (Weight)
d) 240,000 (population of a city)
e) 3.60 ×106 (population of a city)

3.7 Measurement Errors

Measurement error is the amount of inaccuracy. Precision is a measure of how well
a result can be determined (without reference to a theoretical or true value). It is the
degree of consistency and agreement among independent measurements of the
same quantity; also the reliability or reproducibility of the result. Measurement
errors fall into two categories: random errors and systematic error.

3.7.1 Random and Systematic Errors

Random errors occur because of random and inherently unpredictable events in the
measurement process. Systematic errors occur when there is a problem in the
measurement system that affects all measurements in the same way, such as making
them all too low or too high by the same amount. Suppose you are measuring the
weight of a glass object, the weight of the object ranges between 3 pounds – 3.5 pounds
when you put the glass object on the scale. We can say that the scale introduces a
random error, because any particular measurement may be either too high or too
low/falls within the above-mentioned range. If we notice that the minimum reading
scale shows, is 0.5 pounds when there is nothing on it, this type of error is called a
systematic error, because it is caused by an error in the measurement system—that is,
an error that consistently (systematically) affects all measurements.

If we discover a systematic error, we can go back and adjust the affected

measurements. In contrast, the unpredictable nature of random errors makes it
impossible to correct them. However, you can minimize the effects of random
errors by making many measurements and averaging them. For example, if you
measure the baby’s weight ten times, your measurements will probably be too high
in some cases and too low in others. You can therefore get a better estimate of the
baby’s true weight by averaging the ten individual measurements.

3.7.2 Size of Errors: Absolute versus Relative Error

Often interested to know whether an error is big enough to be of concern or small
enough to be unimportant, the concept of absolute versus relative error may be
helpful. The absolute error describes how far a measured (or claimed) value lies
from the true value.

52
 Absolute error = measured value - true value
The relative error compares the size of the absolute error to the true value and is
often expressed as a percentage:
Relative Error = measured value - true value × 100%
true value
The absolute and relative errors are positive when the measured or claimed value is
greater than the true value and negative when the measured or claimed value is less
than the true value. Note the similarity between the ideas of absolute and relative
error and those of absolute and relative change or difference.

Suppose you go to the store and buy what you think is 6 pounds of sugar, but because
the store’s scale is poorly set, you actually get only 4 pounds. You would probably
be upset by this 2-pound error. Now suppose you are buying food for a celebration
in your village and you order 3,000 pounds of rice, but you actually receive only
2,998 pounds. You are short by the same 2 pounds as before, but in this case, the
error probably doesn’t seem very important.

In a more technical language, the 2-pound error in both cases is an absolute error; it
describes how far the claimed or measured value lies from the true value. A relative
error compares the size of an absolute error to the true value. The relative error for the
first case is fairly large because the absolute error of 2 pounds is half the true weight of
4 pounds; we say that the relative error is 2>4, or 50%. In contrast, the relative error for
the second case is the absolute error of 2 pounds divided by the true hamburger weight
of 2,998 pounds, which is only 2>2998 ≈ 0.00067, or 0.067%.

Examples
1) The true weight of a person is 125 pounds, but the scale, s/he uses to weigh,
shows 130 pounds. Find the absolute and relative error in this case.
The measured value is the scale reading of 130 pounds, and the true value
is 125 pounds. The absolute and relative errors are:

Absolute Error = measured value - true value

= 130 lb - 125 lb = 5 lb

Relative Error = measured value - true value ×100%

true value

= 5 lb × 100% = 4%
125 lb

The measured weight is too high by 5 pounds, or 4%.

53
 2) The government claims that a developmental dam program costs 49.0
billion rupees, but an audit shows that the true cost is 50.0 billion rupees.
Find the absolute and relative error in this case.

The claimed cost of 49.0 billion rupees can be treated as the measured
value. The true value is the true cost of 50.0 billion rupees. The absolute
and relative errors are:

Absolute Error = 49.0 billion rupees- $50.0 billion rupees

= - 1.0 billion rupees

Relative Error = 49.0 billion - 50.0 billion × 100%

50.0 billion

= -2%

The claimed cost is too low by 1.0 billion rupees or 2%.

3.8 Accuracy and Precision in Reporting Results

Accuracy describes how closely a measurement approximates a true value. An

accurate measurement has a small relative error. Precision describes the amount of
detail in a measurement.

The goal of any measurement is to obtain a value that is as close as possible to the
true value. Accuracy describes how close the measured value lies to the true value.
Precision describes the amount of detail in the measurement. For example, suppose
a census says that the population of your hometown is 72,453 but the true population
is 96,000. The census value of 72,453 is quite precise because it seems to tell us the
exact count, but it is not very accurate because it is nearly 25% smaller than the
actual population of 96,000. Note that accuracy is usually defined by relative error
rather than absolute error. For example, if a company projects sales of $7.30 billion
and true sales turn out to be $7.32 billion, we say the projection was quite accurate
because it had a relative error of less than 1%, even though the absolute error of
$0.02 billion represents $20 million.

54
 Example
Suppose the true weight of a person is 102.4 pounds. The scale at the doctor’s
office, which can be read only to the nearest quarter pound, says that that person
weighs 102¼ pounds. The scale at the gym, which gives a digital readout to the
nearest 0.1 pound, says that he weighs 100.7 pounds. Which scale is more precise?
Which is more accurate?

Solution: The scale at the gym is more precise, because it gives his weight to the
nearest tenth of a pound while the doctor’s scale gives his weight only to the
nearest quarter pound. However, the scale at the doctor’s office is more accurate,
because its value is closer to his true weight.

3.9 Combining Numbers

We must be very careful when we combine measured numbers. Otherwise, we may
state answers with more certainty than they deserve. In scientific or statistical work,
researchers conduct careful analyses to determine how to combine numbers
properly. For most purposes, however, we can use two simple rounding rules given
below.
 Rounding rule for addition or subtraction: Round your answer to the same
precision as the least precise number in the problem.
 Rounding rule for multiplication or division: Round your answer to the
same number of significant digits as the measurement with the fewest
significant digits.

Note: To avoid errors, the rounding must only be done after completing all the
operations, not during intermediate steps.

Suppose the population of your city is One day, your relative moves to your city to
stay in your house. What is the population of your city now? You might be tempted
to add your relative to the city’s population, making the new population 300,001.
However, the number 300,000 has only 1 significant digit, implying that the
population is known only to the nearest 100,000 people. The number 300,001 has 6
significant digits, which implies that you know the population exactly. Clearly, your
relative’s move cannot change the fact that the population is known only to the
nearest 100,000. The population is still 300,000, despite the addition of your relative.

In excel, the numbers are rounded to specify the precision. First, open the “Format
Cells”, dialog box, there is an option to format numbers in the cell that allows to
choose how many decimal places are displayed.

55
Examples
1. A book written in 1985 states that the oldest Mayan ruins are 2000 years old.
How old are they now?

A book written in 1985 is roughly 30 years old, so we might be tempted to

add 30 years to 2000 years to get 2030 years for the age of the ruins. However,
2000 years is the less precise of the two numbers: It is precise only to the
nearest 1000 years, while 30 years is precise to the nearest 10 years.
Therefore, the answer also should be precise only to the nearest 1000 years:

2000 yr + 30 yr = 2030 yr ≈ 2000yr

Precise to Precise to Must round to Correct final
nearest 1000 nearest 10 nearest 1000 answer

Given the precision of the age of the ruins, they are still 2000 years old,
despite the 30-year age of the book.

56
 2. The government in a town of 82,000 people plans to spend 41.5 million
rupees this year. Assuming all this money must come from taxes, what
average amount must the city collect from each resident?
We find the average tax by dividing the 41.5 million rupees, which has 3
significant digits, by the population of 82,000, which has 2 significant digits.
The population has the fewest significant digits, so the answer should be
rounded to match its 2 significant digits.
41,500,000 rupees ÷ 82,000 persons = Rs. 506.10/- per person ≈ Rs. 510/- per person

3 significant 2 significant Must round to 2 Correct final

digits digits significant digits answer
The average resident must pay about Rs. 510/- in taxes.

3.10 Index Number

An index number provides a simple way to compare measurements made at different
times or in different places. The value at one particular time (or place) is chosen as
the reference value. The index number for any other time (or place) is:
value
Index number x 100
reference value
The term index is commonly used for almost any kind of number that provides a
useful comparison, even when the numbers are not standard index numbers. For
example, body mass index (BMI) provides a way of comparing people by height
and weight, but is defined without any reference value. Specifically, body mass
index is defined as weight (in kilograms) divided by height (in meters) squared.
Example
Suppose the cost of gasoline today is 350/- per gallon. Using the 1980 price as
the reference value, find the price index for gasoline today.

Solution: We use the 1980 price of 20/- per gallon as the reference value to find
the price index for the 350/- gasoline price today.

current price 350

Index number = x 100  x 100  1750
1980' s price 20

This price index for the current price is 1750, which means the current gasoline
price is 1750% of the 1980’s price.

57
3.10.1 Consumer Price Index
Consumer Price Index (CPI) is based on an average of prices for a sample of more
than 60,000 goods, services, and housing costs. It is computed and reported after
regular intervals. The CPI allows us to compare overall prices at different times.
For example, to find out how much higher typical prices were in 2015 than in 1995,
we compute the ratio of the CPIs for the two years, using the shorthand CPI2015
to represent the CPI for 2015 (and similar notation for other years):

CPI2015 218 .1
  1.43
CPI1995 152 .4

Based on the CPI, typical prices in 2015 were 1.43 times those in 1995, or 43%
higher. For example, a typical item that cost Rs.1000/- in 1995 would have cost
Rs.1430/- in 2015.
Example
Suppose you needed Rs. 30,000/- to maintain a particular standard of living in
2000. How much would you have needed in 2020 to maintain the same living
standard? Assume that the average price of your typical purchases has risen at the
same rate as the Consumer Price Index (CPI).

Solution: We compare prices for two different years by comparing the CPIs for
those years:
CPI2020 = 229.6 =1.333
CPI2000 172.2
That is, typical prices in 2020 were 1.333 times those in 2000. If you needed
Rs.30,000/- for your standard of living in 2000, then in 2020 you would have
needed 1.333 × Rs. 30,000/- = Rs. 40,000/- for the same standard of living.

3.10.2 Rate of Inflation

The rate of inflation refers to the relative change in the CPI from one year to the
next. For example, the inflation rate from 1978 to 1979 was the relative increase in
the CPI between those two years:
Inflation rate 1978 to 1979 = CPI1979 - CPI1978
CPI1978
= 72.6 - 65.2
65.2
= 0.113 = 11.3%
As measured by the CPI, the rate of inflation from 1978 to 1979 was 11.3%.

58
 Main points:
1. Errors can occur in many ways, but generally can be classified as one of
two basic types: random errors or systematic errors.
2. Whatever the source of an error, its size can be described in two different
ways: as an absolute error or as a relative error.
3. Once a measurement is reported, we can evaluate it in terms of its accuracy
and its precision.

SUMMARY

In this unit, we have observed the influence of numeracy in our everyday

experiences. From simple tasks like counting and measuring to more complex
applications such as financial management and data analysis, numbers serve as
essential tools for understanding and interacting with the world around us.

Through our exploration of fundamental numerical concepts and practical

applications, we have gained valuable insights into the importance of numerical
literacy in facilitating informed decision-making, problem-solving, and effective
communication. By honing our arithmetic skills and embracing numeracy as a
foundational skill set, we have equipped ourselves with the tools necessary to
navigate the challenges and opportunities of modern life. Moreover, our journey
has emphasized the interconnectedness of numeracy with other domains of
knowledge, from science and technology to economics and beyond. By recognizing
the interdisciplinary nature of numerical literacy, we are prepared in a better way
to engage with complex issues.

As we come to the end of this unit, let us reflect on the significance of numbers in
shaping our daily experiences and recognize the importance of ongoing learning
and development in this critical area. By continuing to cultivate our numerical skills
and seeking out opportunities for growth, we can master the power of numbers to
enrich our lives and make positive contributions to the world around us.

59
 EXERCISES
Multiple-Choice Questions
1. What is 25% expressed as a fraction?
a) ½ b) 1/4
c) 1/5 d) 1/8
Answer: b) ¼

2. If the price of an item increases from 200 PKR to 250 PKR, what is the
percentage increase?

a) 20% b) 25%
c) 30% d) 35%
Answer: b) 25%

3. Which of the following is an abuse of percentages?

a) Averaging percentages directly
b) Using percentages to show change
c) Using percentages for comparison
d) Converting percentages into fractions
Answer: a) Averaging percentages directly

4. Convert 0.00045 to scientific notation.

a) 4.5×10-4 b) 4.5×10−3
c) 4.5×10−2 d) 4.5×10−5
−4
Answer: a) 4.5×10

5. What is the result of (2.5×103) + (3.5×103) in scientific notation?

a) 6.0×103 b) 5.0×103
3
c) 7.5×10 d) 8.5×103
Answer: a) 6.0×103

6. What is the absolute error if the measured value is 12.5 cm and the true
value is 12.7 cm?
a) 0.2 cm b) 0.1 cm
c) 0.3 cm d) 0.4 cm
Answer: a) 0.2 cm
7. How is precision different from accuracy?
a) Precision refers to correctness, accuracy to consistency.
b) Precision refers to consistency, accuracy to correctness.
c) Precision is about significant digits, and accuracy is about rounding.
d) Precision is for large numbers, accuracy for small numbers.
Answer: b) Precision refers to consistency, accuracy to correctness.

60
8. What does the Consumer Price Index (CPI) measure?
a) Inflation rate b) Change in prices over time
c) Cost of living d) All of the above
Answer: d) All of the above

9. What is the result of (4.0×102) × (2.0×103) in scientific notation?

a) 8.0×106 b) 8.0×105
4
c) 8.0×10 d) 8.0×103
5
Answer: b) 8.0×10

10. If a measurement is reported as 25.0 ± 0.5, what is the relative error?

a) 2% b) 4%
c) 6% d) 8%
Answer: a) 2%

Short-Answer Questions
1. Convert 3.75 to a percentage.
2. Define "absolute error" and give one example.
3. Write down the procedure for converting a number to scientific notation.
4. How do you add two numbers in scientific notation? Provide an example.
5. Differentiate between accuracy and precision with a practical example.
6. What is the significance of rounding to significant digits in problem-solving?
7. Explain the abuses of percentages with an example.
8. Convert 7.5 × 102 back to standard form.
9. Calculate the percentage of 5% of 1000.
10. What does the Index Number represent in economic terms?

Subjective Questions
1. a) If the price of an item decreases from 500 PKR to 400 PKR, calculate
the percentage decrease.
b) Compare the income ratio of two individuals earning 20,000 PKR and
25,000 PKR. Express it in the simplest form.

2. Solve the following:

a) Convert 0.0075 into scientific notation.
b) Multiply (2.0 × 105) × (4.0×103) and express the result in scientific
notation.

3. A scientist measures the length of a table as 120.5 cm. The actual length is
121.0 cm.
a) Calculate the absolute error.
b) Calculate the relative error as a percentage.

61
4. If the Consumer Price Index (CPI) for a base year is 100 and the Consumer
Price Index (CPI) for the current year is 125, calculate the inflation rate.
Explain how CPI affects daily life.
5. a) Add (3.0 ×103) + (2.5×102). Round the result to two significant digits.
b) Subtract (6.0×104) − (5.0×103) and express the answer in scientific
notation.
6. Calculate 30% of 50% of 800. Show all steps clearly and explain the concept
of percentage of percentages.
7. Explain the differences between random and systematic errors in
measurements with examples. Why is it important to understand these errors
in order to report the results?

REFERENCES
Aufmann, R. N., Lockwood, J.S., Nation, R. D. & Clegg, D. K. (2017). Mathematical
Thinking and Quantitative Reasoning. Boston: Houghton Mifflin Company.

Bennett, J. & Briggs, W. (2015). Using & Understanding Mathematics: A Quantitative

Reasoning Approach. Boston: Pearson.

De MesQuita, E. B. & Fowler, A. (2021). Thinking Clearly with Data: A Guide to

Quantitative Reasoning and Analysis. Princeton: Princeton University Press.

Imai, K. (2017). Quantitative Social Science: An Introduction. Princeton: Princeton

University Press.

62
Unit–4

MANAGING MONEY

Written by: Dr. Mubeshera Tufail

Reviewed by: Ms. Nazish

63
 INTRODUCTION
Managing money is an essential skill that affects every aspect of our lives, from our
day-today expenses to our long-term financial security. In today's fast-paced and
ever-changing world, the ability to effectively manage finances has become
increasingly important for individuals and families alike. Whether it is creating a
budget, saving for emergencies, or planning for retirement, mastering the art of
money management is crucial for achieving financial stability and success.

In this unit, we will explore the fundamentals of managing money, offering practical
tips and strategies to help you take control of your finances and make informed
decisions about your financial future. From understanding income and expenses to
setting financial goals and making smart investments, we will cover a wide range of
topics designed to empower you to achieve your financial aspirations.

Through real-life examples, interactive exercises, and actionable advice, we will

delve into the key principles of money management and provide you with the tools
and knowledge you need to navigate the complexities of personal finance with
confidence and ease. Whether you are just starting your financial journey or looking
to refine your existing financial habits, this guide will equip you with the skills and
resources necessary to build a solid foundation for financial success.

LEARNING OUTCOMES

After completing the unit, you would be able to:

1. Understand the importance of effective money management in achieving
financial stability and long-term goals.
2. Create and maintain a personal budget that reflects income, expenses, and
financial priorities.
3. Identify and prioritize financial goals such as saving for emergencies, paying
off debt, and investing for the future.
4. Demonstrate proficiency in basic financial calculations, including calculating
interest, budgeting for expenses, and determining savings goals.
5. Develop critical thinking skills to evaluate financial products and services such
as loans and investment opportunities.
6. Apply financial management principles to real-life scenarios, making
informed decisions to achieve personal financial goals and enhance overall
financial well-being.

64
4.1 Managing Money
Money is not everything, but it certainly has a great influence on our lives. Most
people would like to have more money, and there is no doubt that more money
allows you to do things that simply aren’t possible with less. However, when it
comes to personal happiness, studies show that the amount of money you have is
less important than having your personal finances under control. People who lose
control of their finances tend to suffer from financial stress, which in turn leads to
higher divorce rates and other difficulties in personal relationships, higher rates of
depression, and a variety of other ailments. In contrast, people who manage their
money well are more likely to say they are happy, even when they are not
particularly wealthy. So if you want to attain happiness—along with any financial
goals you might have—the first step is to make sure you understand your personal
finances enough to keep them well under control.

4.2 Basics of Budget

A budget is a tool that expresses activities in financial terms. A budget shows the
money you need to spend to carry out your planned activities. The money you need
to spend is called expenditures or costs. The money you need to make/receive is
called income. The process of making the budget is called budgeting. It helps to
control and monitor your finances.

Example:
Ali is not a very rich person. He is a student. He loves to sit down for tea at the
college coffee shop. With tax and tips, he usually spends Rs. 25/- on his tea. He
gets at least one a day (on average), and about every three days, he has a second
cup of tea. He figures that it is not a big expense. Is it?

Solution: One cup of tea a day means 365 cups per year. A second cup of tea on
every third day adds about 365÷3 = 121 more cups (rounding down). That means
365 + 121 = 486 lattes a year. At Rs. 25/- per cup, this comes to:
486 × 25/- = Rs. 12, 150/-

Ali’s tea habit is costing him more than Rs. 12, 150/- per year. That might not be
much if he is financially well settled. But it is more than one month of rent for an
average college student. He could easily build a savings balance of more than
Rs. 12,150/- over the next ten years.

Making a budget means keeping track of how much money you have coming in
and going out and then deciding what adjustments you need to make. The following
box summarizes the four basic steps in making a budget.

65
 A Four-Step Budget
1. List all your monthly income. Be sure to include an average monthly amount
for any income you do not receive monthly (such as once-per-year payments).
2. List all your monthly expenses. Be sure to include an average amount for
expenses that do not recur monthly, such as expenses for tuition, books,
vacations, and holiday gifts.
3. Subtract your total expenses from your total income to determine your net
monthly cash flow.
4. Make adjustments as needed.

The most difficult part of the budget process is making sure you include every
expense in your list of monthly expenses. A good technique is to keep careful track
of your expenses for a few months. For example, carry a small notepad with you
and write down everything you spend, or use a personal budgeting app that will
work with your phone or tablet. And do not forget your occasional expenses, or
else you may severely underestimate your average monthly costs.

Once you have made your lists for steps 1 and 2, the third step is just arithmetic:
Subtracting your monthly expenses from your monthly income gives you your
overall monthly cash flow. If your cash flow is positive, you will have money left
over at the end of each month, which you can use for savings. If your cash flow is
negative, you have a problem: You will need to find a way to balance it out, either
by earning more, spending less, using savings, or taking out a loan.

Example:
In addition to monthly expenses, Ali has the following college expenses that he
pays twice a year: Rs. 35000/- for the tuition each semester, Rs. 7500/- in student
fees each semester, and Rs. 800/- for textbooks each semester. How should you
handle these expenses in computing your monthly budget?

Solution: Because these expenses are paid twice a year, the total amount paid
over a whole year is:
2 × (35000 + 7500 + 800) = 86,600/-

To average this total expense for the year on a monthly basis, we divide it by 12:
86,600 ÷ 12 ≈ Rs. 7220/-

Your average monthly college expense for tuition, fees, and textbooks comes to
a little less than Rs. 7220/-, so Ali should put Rs. 7220/- per month into his
expense list.

66
4.3 Budget and Financial Goals
A careful analysis of the budget will be helpful. For example, many people find that
they are spending a lot more in certain categories than they had imagined and that
the items they thought were causing their biggest expenses are small compared to
other items. Once you evaluate your current budget, you will almost certainly want
to make adjustments to improve your cash flow for the future. However, there are
no set rules for adjusting your budget, so you will need to use your critical thinking
skills to come up with a plan that makes sense for you. You can also get help from
your family members and teachers for making decisions about financial planning.

Figuring out your monthly budget is a crucial step in taking control of your personal
finances, but it is only the beginning. Once you have understood your budget, you
need to start looking at longer-term financial issues. The general principle is always
the same: Before making any major expenditure or investment, be sure you figure
out how it will affect your finances over the long term.

It is rare for a financial question to have a clear “best” answer for everyone. Instead,
your decisions depend on your current circumstances, your goals for the future, and
some unavoidable uncertainty. The key to financial success is to approach all your
financial decisions with a clear understanding of the available choices. To achieve
your financial goals, go through the following points:
1. Achieving your financial goals will almost certainly require that you build up
savings over time. Although it may be difficult to save while you are in
college, ultimately you must find a way to save. You will also need to
understand how savings work and how to choose appropriate savings plans.
2. You will probably need to borrow money at various points in your life. You may
already have credit cards, or you may be using student loans to help pay for
college or university fees. In the future, you may need loans for large purchases,
such as a car or a home. Because borrowing is very expensive, it is critical that
you understand the basic mathematics of loans so you can make wise choices.
3. Many of our financial decisions have consequences on our taxes. Sometimes,
these tax consequences can be large enough to influence our decisions. For
example, the fact that interest on house payments is tax deductible while rent
is not may influence your decision to rent or buy. While no one can expect to
understand tax lawfully, it is important to have at least a basic understanding
of how taxes are computed and how they can affect your financial decisions.
4. Finally, we do not live in isolation, and our personal finances are inevitably
intertwined with those of the government. For example, when politicians
allow the government to run deficits, it means that future politicians will have
to collect more taxes from you or your children. So, understanding the federal
budget is important for your future.

67
4.4 Simple versus Compound Interest Formula
The principal in financial formulas is the balance upon which interest is paid.
Simple interest is interest paid only on the original investment and not on any
interest added at later dates. Compound interest is interest paid both on the original
investment and on all interest that has been added to the original investment.

Imagine that you deposit Rs. 1000/- in a bank Y, which promises to pay 5% interest
each year. At the end of the first year, the bank sends you a check for:
5% × 1000 = 0.05 × 1000 = Rs. 50/-

Because you receive a check for your interest, your balance with the bank remains
Rs.1000/-, so you get the same Rs.50/- payment at the end of the second year, and
the same again for the third year. Your total interest for the three years is 3 × 50 =
Rs. 150/-. Therefore, your original investment of Rs. 1000/- grew in value to Rs.
1150/-. The Bank’s method of payment represents simple interest, in which interest
is paid only on your initial investment. The amount of money on which interest is
paid is called the principal.

To understand compound interest, suppose that you place the Rs. 1000/- in a bank
account in a bank Z that pays the same 5% interest once a year. Instead of paying
you the interest directly, the bank adds the interest to your account. At the end of
the first year, the bank deposits 5% × Rs. 1000/- = Rs.50/- interest into your
account, raising your balance to Rs.1050/. At the end of the second year, the bank
again pays you 5% interest. This time, however, the 5% interest is paid on the
balance of Rs.1050/-, so it amounts to:
5% × 1050 = 0.05 × 1050 = Rs. 52.50/-

Adding this Rs. 52.50/- raises your balance to

1050 + 52.50 = Rs. 1102.50/-

This is the new balance on which your 5% interest is computed at the end of the
third year, so your third interest payment is:
5% × 1102.50 = 0.05 × 1102.50 = Rs. 55.13/-

Therefore, your balance at the end of the third year is

1102.50 + 55.13 = Rs. 1157.63/-

68
Despite identical interest rates, you end up with Rs. 7.63/- more if you use the bank
Z instead of bank Y. The difference comes about because the bank Z pays you
interest on the interest as well as on the original principal. This type of interest
payment is called compound interest. This formula can be used to calculate profit
on a certain amount of investment in a business.

4.2.1 Compound Interest Formula

Suppose that Ali made an investment of Rs. 500/- in a business for 30 years. Let us
assume that the interest rate is 4% per year. For each year, we can calculate the
inter- est and the new balance with interest. The first three columns of Table 2 show
these calculations for 04 years.

Table 4.1: Calculating Compound Interest (starting principal P Rs. 500/-, annual
interest rate APR 4%)
After ‘n’
Interest Balance Or Equivalently
Years
Year 1 4%×500=20 500+20= 520 500× 1.04 = 520
Year 2 4%×520=20.8 520+20.8= 540.8 520× (1.04)2= 540.8
Year 3 4%×540.8=21.63 540.8+21.63=562.43 520× (1.04)3= 562.43
Year 4 4%×562.43=22.49 562.43+22.49= 584.93 520× (1.04)4= 584.93

As shown in the fourth column, there is a much easier way to calculate the profit
rate. The 4% annual interest rate means that each end-of-year balance is 104% of,
or 1.04 times, the previous year’s balance. As shown in the last column of Table
4.1, we can get each balance as follows:
 The balance at the end of 1 year is the initial deposit of Rs. 500/- times 1.04:
500 × 1.04 = 520/-

 The balance at the end of 2 years is the 1-year balance times 1.04, which is
equal to the initial deposit times (1.04)2:

500 × 1.04 × 1.04 = 500 × (1.04)2 = 540.8/-

 The balance at the end of 3 years is the 2-year balance times 1.04, which is
equal to the initial deposit times (1.04)3:

500× 1.04 × 1.04 × 1.04 = 500 × (1.04)3 = 562.43/-

69
 Continuing the pattern, we find that the balance after Y years is the initial
deposit times 1.04 raised to the power of those number of years. For example,
the balance after Y = 10 years is:
500(1.04)10 = 740.12/-

When interest is compounded just once a year, as it is in this case, the interest rate
is called the annual percentage rate, or APR. The number of compounding
periods is then simply the number of years Y over which the principal earns interest.
We therefore obtain the following general formula for interest compounded once a
year.

The Compound Interest Formula (for Interest Paid once a Year)

A= P × (1+ APR)y

A= accumulated balance after Y years

P= starting principal
APR = annual percentage rate (as a decimal) Y = number of years

Notes:
(1) The starting principal, P, is often called the present value (PV), because we
usually begin a calculation with the amount of money in an account at
present.
(2) The accumulated balance, A, is often called the future value (FV), because
it is the amount that will be accumulated at some time in the future.
(3) When using this formula, you must express the APR as a decimal rather
than as a percentage.

In the example mentioned above, the annual interest rate is APR = 4% = 0.04, and
interest is paid over a total of 25 years. The accumulated balance after Y = 25 years
is:
A = P × (1 + APR)Y
= 500 × (1 + 0.04)25
= 500 × 2.0425
= 1.02 × 1028/-

As the administrator claimed, a 4% interest rate for 25 years would make the
original 500/- amount grow to 1.02× 1028/-.

70
4.5 Saving Plans & Investment

Suppose you want to save money, perhaps for retirement or for your house
expenses. You could deposit a lump sum of money today and let it grow through
the power of compound interest. But if you do not have a large lump sum to start
such an account, you can start depositing a small amount each month or after
regular intervals to save it.

For most people, a more realistic way to save is by depositing smaller amounts on
a regular basis. For example, you might put 500/- a month into savings. Such long-
term savings plans are so popular that many have special names e.g., some get
special tax treatment including National Saving Accounts (NSAs).

4.5.1 Savings Plan Formula

Suppose you deposited Rs. 400/- into a savings plan at the end of each month. To
keep the numbers simple, suppose that your plan pays interest monthly at an annual
rate of APR = 12%, or 1% per month.
 You begin with $0 in the account. At the end of month 1, you make the first
deposit of 400/-.

 At the end of month 2, you receive the monthly interest on the 400/- already
in the account, which is 1% × 400/- = 4/- . In addition, you make your monthly
deposit of 400/-. Your balance at the end of the second month is:

400 + 4 + 400 = 804/-

 At the end of the third month, you receive 1% interest on the 400/-already in
the account, or 1% × 800 = 8/- . Adding your monthly deposit of 400/- , you
have a balance at the end of the third month:

804 + 8 + 400 = 212/-

Table 4.2 continues these calculations through 6 months. In principle, we could

extend this table indefinitely—but it would take a lot of work. There is a formula
“the savings plan formula” (next page) which would make these calculations easier
and less time-consuming.

71
Table 4.2: Savings Plan Calculations (400/- monthly deposits; APR 12% or 1%
per month
Prior Interest on a prior End-of- month
Month New balance
Balance balance deposit
Month 1 0/- — 400/- 400/-
Month 2 400/- 1%×400= 4 400/- 804/-
Month 3 804/- 1%×804= 8.04 400/- 1212.04/-
Month 4 1212.04 1%×1212.04= 2.12 400/- 1624.16/-
Month 5 1624.16 1%×1624.16= 16.24 400/- 2040.4/-
Month 6 2040.4 1%×2040.4= 20.40 400/- 2460.8/-

Savings Plan Formula (Regular Payments)

A = accumulated savings plan balance

PMT = regular payment (deposit) amount
APR = annual percentage rate (as a decimal)
n = number of payment periods per year
Y = number of years

As with compound interest, the accumulated balance (A) is often called the future
value (FV); the present value is the starting principal (P), which is 0 because we
assume the account has no balance before the payments begin.

4.5.2 Total and Annual Return

In the examples, we assumed that you get a constant interest rate for a long period
of time. In reality, interest rates usually vary over time. Consider a case in which
you initially deposit Rs. 1000/- and it grows to Rs. 1500/- in 5 years. Although the

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interest rate may have varied during the 5 years, we can still describe the change in
both total and annual terms. Your total return is the percentage change in the
investment value over the 5-year period:

Total return = new value - starting principal × 100%

starting principal

= 1500 – 1000 × 100% = 50%

1000

The total return on this investment is 50% over 5 years.

Your annual return is the average annual rate at which your money grew over the 5
years. It is the constant annual percentage yield (APY) that would give the same
result in 5 years. One way to determine this annual return is through trial and error.
If you test APY = 8.5% = 0.085 with a starting principal P = 1000/- and a number
of years Y = 5, you will find that the principal grows to approximately A = 1500/:

A = P × (1 + APY)Y = 1000 × (1 + 0.085)5 = 1503.66/-

You can find a more exact answer using the following formula for the annual return.

Total and Annual return

Consider an investment that grows from an original principal P to a later
accumulated balance A. The total return is the percentage change in the
investment value:
(A  P)
Total return = x 100%
P

The annual return is the annual percentage yield (APY) that would give the same
overall growth over Y years. The formula is:

Annual return = (A ÷ P)1/Y -1

This formula gives the annual return as a decimal; multiply by 100% to express
it as a percentage.

Example 1: You invest 3000/- in the Clearwater mutual fund. Over 4 years, your
investment grows in value to 8400/-. What are your total and annual returns for the
4-year period?

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Solution: You have a starting principal P = 3000/- and an accumulated value of
A= 8400/- after Y = 4 years. Your total and annual returns are:

Total return = (A – P) × 100%

P
= (8400 – 3000)× 100%
3000
= 180%

Annual return = (A ÷ P)1/Y -1

= (8400 ÷ 3000)1/4 -1
= 4 √2.8 – 1 ≈ 0.294 = 29.4%

Your total return is 180%, meaning that the value of your investment after 4 years
is 1.8 times its original value. Your annual return is approximately 0.294, or 29.4%,
meaning that your investment has grown by an average of 29.4% each year.

Example 1: You purchased shares on a website for Rs. 2000/-. Three years later,
you sold them for Rs. 1100/-. What were your total return and annual return on this
investment?

Solution: You had a starting principal P = 2000/- and an accumulated value of

A=1100/- after Y = 3 years. Your total and annual returns were:
(A  P)
Total return = x 100%
P

(1100 - 2000)
 x100 %
2000
= – 45%

Annual return = (A ÷ P)1/Y -1

= (1100 ÷ 2000)1/4 -1
= 3 √0.55 – 1 = - 0.18

Your total return was -45% meaning that your investment lost 45% of its original
value. Your annual return was -0.18 or -18%, meaning that your investment lost an
average of 18% of its value each year.

Note: In Excel, use the ̂ symbol to raise to a power, with the fractional power in
parentheses.

74
4.6 Investment: Types and Investment Considerations
4.6.1 Types of Investments
By combining what we have covered about savings plans with the ideas of total and
annual return, we can now study investment options. Most investments fall into one of
the three basic categories described as follows. Three Basic Types of Investments.
1. Stock (or equity) gives you a share of ownership in a company. You invest
by purchasing shares of the stock, and the only way to get your money out is
to sell the stock. Because stock prices change with time, the sale may give
you either a gain or a loss on your original investment.
2. A bond (or debt) represents a promise of future cash. You usually buy bonds
issued by either a government or a corporation. The issuer pays you simple
interest (as opposed to compound interest) and promises to pay back your
initial investment plus interest, later.
3. Cash investments include money you deposit into bank accounts, and
certificates of deposit (CD). Cash investments generally earn interest.

There are two basic ways to invest in any of these categories: (1) You can invest
directly, which means buying individual investments yourself (often through a
broker). (2) You can invest indirectly by purchasing shares in a mutual fund,
through which a professional fund manager invests your money along with the
money of others participating in the fund.

4.6.2 Investment Considerations: Liquidity, Risk, and Return

No matter what type of investment you make, you should evaluate the investment
in terms of three general considerations.
 Liquidity: How difficult is it to take out your money? An investment from
which you can withdraw money easily, such as an ordinary bank account, is
said to be liquid. The liquidity of an investment like real estate is much lower
because real estate can be difficult to sell.
 Risk: Is your investment principal at risk? The safest investments are
federally insured bank accounts: there is virtually no risk of losing the
principal you’ve invested. Stocks and bonds are much riskier because they
can drop in value, in which case you may lose part or all of your principal.
 Return: How much return (total or annual) can you expect on your
investment? A higher return means you earn more money. In general, low-
risk investments offer relatively low returns, while high-risk investments
offer the prospects of higher returns—along with the possibility of losing your
principal.

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4.6.3 Historical Returns
One of the most difficult tasks of investing is trying to balance risk and return.
Although there is no way to predict the future, historical trends offer at least some
guidance. To study historical trends, financial analysts generally look at an index
that describes the overall performance of some category of investment.

Example: Suppose your great-great-grandmother invested 100/- at the end of 1900 in

each of three funds that tracked the averages of stocks, bonds, and cash, respectively.
Assuming that her investments grew over the period of years approximately how much
would each investment have been worth at the end of 2012?

Solution: We find the value of each investment with the compound interest formula
(for interest compounded once a year), setting the interest rate (APR) to the average
annual return for each category. In each case, the starting principal is P=Rs.100/-
and Y = 112 (the number of years from the end of 1900 to the end of 2012).

Stocks (annual return = 0.063) A = P × (1 + APR)Y

= 100 ×(1+0.063)112= 93,696.99/-

Bonds (annual return = 0.020) A = P × (1 + APR)Y

= 100×(1+0.020)112=918.80/-

Cash (annual return = 0.009) A = P × (1 + APR)Y

= 100 × (1 + 0.009)112 = 272.78/-

Notice the enormous difference in how much Rs.100/- grows with each type of
investment. Unfortunately, the fact that stocks have clearly been the long-term
investment of choice in the past is no guarantee that they will remain the best long-
term investment for the future.

4.7 Loans, Credit Cards & Mortgages

4.7.1 Loans
For any loan, the principal is the amount of money owed at any particular time.
Interest is charged on the loan principal. To pay off a loan, you must gradually pay
down the principal. The loan term is the time you have to pay back the loan in full.

Suppose you borrow Rs. 1200/- at an annual interest rate of APR = 12%, or 1%
per month. At the end of the first month, you owe interest in the amount of
1%× 1200 = 12/-. If you paid only this Rs. 12/- in interest, you would still owe
Rs. 1200/-. That is, the total amount of the loan, called the loan principal, would
76
still be Rs. 1200/-. In that case, you would owe the same Rs. 12/- in interest the
next month. In fact, if you paid only the interest each month, the loan would never
be paid off and you would pay Rs. 12/- per month forever.

If you hope to make progress in paying off the loan, you need to pay part of the
principal as well as interest. For example, suppose that you paid Rs. 200/- toward
your loan principal each month, plus the current interest. At the end of the first
month, you would pay Rs. 200/- toward principal plus Rs. 12/- for the 1% interest
you owe, making a total payment of Rs. 212/-. Because you have paid Rs. 200/-
toward the principal, your new loan principal would be 1200 - 200 = 1000/-. At the
end of the second month, you would again pay Rs. 200/- toward principal and 1%
interest. But this time the interest is on the 1000/- that you still owe. Your interest
payment therefore would be 1% ×1000 = 10/-, making your total payment Rs.210/.
Table 4.3 shows the calculations for the 6 months until the loan is paid off.

Table 4.3: Payments and principal for a Rs. 1200/- loan with principal paid off
at Rs. 200/-
Prior Interest on Payment Toward Total New
Month
Principal Prior Principal Principal Payment Principal
Month 1 1200/- 1% ×1200 = 12/- 200/- 212/- 1000/-
Month 2 1000/- 1% ×1000 = 10/- 200/- 210/- 800/-
Month 3 800/- 1% ×800 = 8/- 200/- 208/- 600/-
Month 4 600/- 1% ×600 = 6/- 200/- 206/- 400/-
Month 5 400/- 1% ×400 = 4/- 200/- 204/- 200/-
Month 6 200/- 1% ×200 = 2/- 200/- 202/- 0/-

With monthly payments as given in Table 4.3, your total payment decreases from
month to month because of the declining amount of interest that you owe. It can
easily be calculated. However, most people prefer to pay the same total amount
each month because it makes planning a budget easier. A loan that you pay off with
equal regular payments is called an installment loan (or amortized loan).

Suppose you wanted to pay off your Rs. 1200/- loan with 6 equal monthly
payments. How much should you pay each month? Because the payments in Table
4 vary between Rs. 202/- and Rs. 212/-, it is clear that the equal monthly payments
must lie somewhere in this range. The exact amount is not obvious, but we can
calculate it with the loan payment formula.

77
 Loan Payment Formula

PMT = regular payment amount

P = starting loan principal (amount borrowed)
APR = annual percentage rate
n = number of payment periods per year
Y = loan term in years

In our current example, the starting loan principal is P = 1200/-, the annual interest
rate is APR = 12%, the loan term is Y = ½ year (6 months), and monthly payments
mean n = 12. The loan payment formula gives:
PMT = P × (APR ÷ n)
[1- (1 + APR ÷ n)(-nY)]
= 1200 × (0.12 ÷ 12)
[1- (1 + 0.12 ÷ 12)(-12×1/2)]
= 1200 × (0.01)
[1- (1 + 0.01)(-6)]
= 12
[1- 0.942]
= Rs. 207.06/-

The monthly payments would be Rs. 207.06/-. Please note that, as we expected, the
payment is between Rs.202/- and Rs.212/-. And because installment loans
gradually pay down the loan principal while the payments remain the same, the
following two features apply to all installment loans:
 The interest due each month gradually decreases.
 The amount paid toward the principal each month gradually increases.

Early in the loan term, the portion going toward interest is relatively high and the
portion going toward principal is relatively low. As the term proceeds, this pattern
gradually reverses, and toward the end of the loan term, most of the payments go
to the principal and relatively little to interest.

78
4.7.1 Credit Cards
Credit card loans differ from installment loans in that you are not required to pay
off your balance in a particular set time period. Instead, you are required to make
only a minimum monthly payment that generally covers all the interest but very
little principal. As a result, it takes a very long time to pay off your credit card loan
if you make only the minimum payments. If you wish to pay off your loan in a
particular amount of time, you should use the loan payment formula to calculate
the necessary payments.

Most credit cards have very high interest rates compared to other types of loans. As
a result, it is easy to get into financial trouble if you get overextended with credit
cards. The trouble is particularly bad if you miss your payments. In that case, you
will probably be charged a late fee that is added to your principal, thereby
increasing the amount of interest due the next month. With the interest charges
operating like compound interest in reverse, failure to pay on time can put a person
into an ever-deepening financial hole.

Example
Suppose you have a credit card balance of Rs. 2300/- with an annual interest
rate of 21%. You decide to pay off your balance over 1 year. How much will you
need to pay each month? Assume you make no further credit card purchases.

Solution: The amount borrowed is P= Rs. 2300/-, the interest rate is APR = 0.21,
and you make n = 12 payments per year. Because you want to pay off the loan in
1 year, we set Y = 1. The required payments are:

PMT = P × (APR ÷ n)
[1- (1 + APR ÷ n)(-nY)]

= Rs. 214.16/-

You must pay Rs. 214.16/- per month to pay off the balance in 1 year.

4.7.2 Mortgages
A home mortgage is an installment loan designed specifically to finance a home. A
down payment is the amount of money you must pay upfront in order to be given
a mortgage or other loan. Closing costs are fees you must pay in order to be given
the loan. They may include a variety of direct costs, or fees charged as points, where
each point is 1% of the loan amount. In most cases, lenders are required to give you
a clear assessment of closing costs before you sign for the loan.

79
One of the most popular types of installment loans is a home mortgage, which is
designed specifically to help you buy a home. Mortgage interest rates generally are
lower than interest rates on other types of loans because your home itself serves as
a payment guarantee. If you fail to make your payments, the lender (usually a bank
or mortgage company) can take possession of your home, through the process
called foreclosure, and sell it to recover some or all of the amount loaned to you.

There are several considerations in getting a home mortgage. First, the lender may
require a down payment, typically 10% to 20% of the purchase price. Then the
lender will loan you the rest of the money needed to purchase the home. Most
lenders also charge fees, or closing costs, at the time you take out a loan. Closing
costs can be substantial and may vary significantly between lenders, so you should
be sure that you understand them. In general, there are two types of closing costs:
 Direct fees, such as fees for getting the home appraised and checking your
credit history, for which the lender charges a fixed dollar amount. These fees
typically range from a few hundred dollars to a couple thousand dollars.
 Fees are charged as points, where each point is 1% of the loan amount. Many
lenders divide points into two categories: an “origination fee” that is charged
on all loans and “discount points” that vary for loans with different rates. For
example, a lender might charge an origination fee of 1 point 11%2 on all
loans, then offer you a choice of interest rates depending on how many
discount points you are willing to pay. Despite their different names, there is
no essential difference between an origination fee and discount points.

You should watch out for any fine print that may affect the cost of your loan. For
example, make sure that there are no prepayment penalties if you decide to pay off
your loan early. Most people pay off mortgages early, either because they sell the
home or because they decide to refinance the loan to get a better interest rate or to
change their monthly payments.

Fixed Rate Mortgages: The simplest type of home loan is a fixed rate mortgage,
in which you are guaranteed that the interest rate will not change over the life of
the loan. Most fixed rate mortgages have a term of either 15 or 30 years, with lower
interest rates on the shorter-term loans.

80
Example: You need a loan of $100,000 to buy your new home. The bank offers
a choice of a 30-year loan at an APR of 5% or a 15-year loan at 4.5% Compare
your monthly payments and total loan cost under the two options. Assume that
the closing costs are the same in both cases and therefore do not affect the choice.

Solution: Mortgages are installment loans, so we use the loan payment formula:

P  (APR  n)
PMT 
[1  (1  APR  n) ( nY) ]

Steps Y= 30 years; APR = 0.05 Y= 30 years; APR = 0.045

1. P  (APR  n) P  (APR  n)
PMT  PMT 
[1  (1  APR  n) ( nY) ] [1 - (1  APR  n) ( nY) ]

100 ,000  (0.05  12) 100,000  (0.05  12)

 
[1  (1  0.05  12) ( 1230) ] [1  (1  0.05  12) ( 1215) ]

= Rs.536.82/- = Rs. 764.99/-

2. 12 mo 536 .88 /  12 mo 764 .99 / 

30 yr   15 yr  
yr mo yr mo
= 193.255/- = 137.698/-

Note that the monthly payments on the 15-year loan are higher by about
765 - 537 = 228. However, the 15-year loan saves you about 193,255 - 137,698 =
55,557/- in total payments. That is, the 15-year loan saves you a lot in the long run,
but it is a good plan only if you are confident that you can afford the higher monthly
payments required for the next 15 years.

4.8 Income Tax

The basic ideas behind income taxes are relatively simple, and most of the arcane
rules apply only to relatively small segments of the population. As a result, most
people cannot only file their own taxes but also understand them well enough to
make intelligent decisions about both personal finances and political tax questions.
Figure 01 summarizes the steps in a basic tax calculation. We will follow the flow
of the steps, defining terms as we go.

81
 The process begins with your gross income, which is all your income for the
year, including wages, tips, profits from a business, interest or dividends from
investments, and any other income you receive.

 Some gross income is not taxed (at least not in the year it is received), such
as contributions to individual retirement accounts (IRAs) and other tax-
deferred savings plans. These untaxed portions of gross income are called
adjustments. Subtracting adjustments from your gross income gives your
adjusted gross income.

 Most people are entitled to certain exemptions and deductions—amounts

that you subtract from your adjusted gross income before calculating your
taxes. Once you subtract the exemptions and deductions, you are left with
your taxable income.

 A tax table or tax rate computation allows you to determine how much tax
you owe on your taxable income. However, you may not actually have to pay
this much tax if you are entitled to any tax credits, such as the child tax credit
that parents can claim. Subtracting the amount of any tax credits gives your
total tax.

 Finally, most people have already paid part or all of their tax bill during the
year, either through withholding (by your employer) or by paying quarterly
estimated taxes (if you are self-employed). You subtract the taxes that you’ve
already paid to determine how much you still owe. If you have paid more than
you owe, then you should receive a tax refund.

 Exemptions are a fixed amount per person (3900/- in 2013 for most teachers).
You can claim the amount of an exemption for yourself and each of your
dependents (for example, children whom you support).

 Deductions vary from one person to another. The most common deductions
include interest on home mortgages, contributions to charity, and taxes you have
paid to other agencies (such as state income taxes or local property taxes).

82
Example 1: Saira earned wages of Rs. 38,200/- , received Rs. 750/- in interest
from a savings account, and contributed Rs. 1200/- to her benevolent fund. She
was entitled to a personal exemption of Rs. 3900/- and to deductions totaling
Rs. 6100/-. Find her gross income, adjusted gross income, and taxable income.

Solution: Saira’s gross income is the sum of all her income, which means the
sum of her wages and her interest:

Gross income = 38,200 + 750 = Rs. 38,950/-

Her Rs. 1200/- contribution to a benevolent fund counts as an adjustment to her

gross income, so her adjusted gross income (AGI) is:

AGI = gross income - adjustments

= 38,950 - 1200 = Rs. 37,750/-

To find her taxable income, we subtract her exemptions and deductions:

Taxable income = AGI - exemptions - deductions

= 37,750 - 3900 - 6100 = Rs. 27,750/-

Her taxable income is Rs. 27,750/-.

Example 2: Suppose you have the following deductible expenditures: Rs. 2500/-
for interest on a home mortgage, Rs. 900/- for contributions to charity, and
Rs. 250/- for state income taxes. Your filing status entitles you to a standard
deduction of Rs. 6100/-. How many itemized deductions, she can claim?

Solution: The total of your deductible expenditures is:

Rs. 2500/- + Rs. 900/- + Rs. 250/- = Rs. 3650/-

If you itemize your deductions, you can subtract Rs.3650/- when finding your
taxable income.

83
 SUMMARY

By the end of this unit, it is evident that financial literacy is a cornerstone of

personal empowerment and long-term success. Throughout our exploration, we
have delved into the fundamental principles of money management, gaining
valuable insights and practical skills to navigate the complex landscape of personal
finance.

From creating budgets and setting financial goals to understanding investment

options and managing debt, we have equipped ourselves with the knowledge and
tools necessary to make informed decisions about our finances. By prioritizing
financial responsibility and adopting prudent financial habits, we can build a solid
foundation for achieving our financial aspirations and securing our future financial
well-being. Moreover, our journey has highlighted the importance of ongoing
learning and adaptation in the ever-evolving world of finance. By staying informed
about changes in the financial landscape and continuously refining our financial
skills, we can adapt to new challenges and seize opportunities to grow our wealth
and achieve our goals.

As we move forward, let us carry forward the lessons learned from this unit and
apply them in our daily lives. Let us commit to practicing sound financial habits,
seeking opportunities for growth, and empowering ourselves to take control of our
financial futures. With dedication, diligence, and a commitment to lifelong
learning, we can navigate the complexities of personal finance with confidence and
achieve financial freedom and security.

84
 EXERCISES
Multiple Choice Questions
1. What is the main purpose of a budget?
a) To plan income and expenses
b) To invest in risky assets
c) To reduce taxes
d) To spend on luxury items
Answer: a) To plan income and expenses

2. Which of the following best describes financial goals?

a) Spending more on entertainment
b) Short-term and long-term targets for managing finances
c) Reducing income taxes entirely
d) Investing only in cash-based assets
Answer: b) Short-term and long-term targets for managing finances

3. What is the key characteristic of a stock investment?

a) Low-risk and fixed return
b) Ownership in a company and potential high returns
c) Guaranteed returns with high liquidity
d) Fixed interest paid annually
Answer: b) Ownership in a company and potential high returns

4. Why is liquidity important in investments?

a) It guarantees a higher return.
b) It allows quick access to money when needed.
c) It ensures low risk in investments.
d) It always results in tax savings.
Answer: b) It allows quick access to money when needed.

5. Which of the following is an example of a cash investment?

a) Government bonds
b) Savings accounts
c) Mutual funds
d) Corporate stocks
Answer: b) Savings accounts

85
6. What does "rate of return" mean in investment terms?
a) The annual tax paid on an investment
b) The profit or loss earned on an investment over time
c) The amount of interest charged on loans
d) The guaranteed income from government bonds
Answer: b) The profit or loss earned on an investment over time

7. What is a common characteristic of credit cards?

a) Fixed monthly repayment amounts
b) High interest rates on unpaid balances
c) Low initial costs with no additional fees
d) No credit checks required
Answer: b) High interest rates on unpaid balances

8. Which of these describes an absolute error?

a) The total value of an error in measurement
b) The percentage difference from an expected value
c) The difference caused by rounding
d) A systematic mistake in calculations
Answer: a) The total value of an error in measurement

9. Why should percentages not be averaged directly?

a) They represent relative values dependent on different bases.
b) They are not measurable values.
c) They always give inflated results.
d) Averaging them always reduces accuracy.
Answer: a) They represent relative values dependent on different bases.

10. What is the purpose of a Consumer Price Index (CPI)?

a) To measure changes in investment risks
b) To track changes in the cost of living over time
c) To evaluate savings account returns
d) To calculate tax rates on income
Answer: b) To track changes in the cost of living over time

86
Short-Answer Questions
1. What is a budget, and why is it important?
2. How can financial goals influence spending and saving habits?
3. Name and explain three types of investments.
4. What are the primary differences between stocks, bonds, and cash
investments?
5. Define liquidity and explain why it matters in financial planning.
6. What are the potential risks of using credit cards?
7. Explain the concept of “accuracy and precision” in financial reporting.
8. What is the significance of the Consumer Price Index (CPI)?
9. Describe the concept of "rate of return" in simple terms.
10. Explain the difference between random and systematic errors.

Subjective Questions
1. a) Define budgeting and explain its components.
b) How can setting financial goals help individuals manage their finances
better?

2. a) Compare and contrast stocks, bonds, and cash investments based on

liquidity, risk, and return.
b) What factors should an individual consider when selecting an investment?

3. a) Explain the role of interest rates in managing credit cards and loans.
b) Discuss the advantages and disadvantages of using credit cards.

4. a) Define and differentiate between random and systematic errors in

financial calculations.
b) Why is precision important in financial reporting, and how can it affect
decision-making?

5. a) Explain the Consumer Price Index (CPI) and its role in measuring the
rate of inflation.
b) How can changes in CPI affect an individual’s financial planning?

87
 REFERENCES

Aufmann, R. N., Lockwood, J.S., Nation, R. D. & Clegg, D. K. (2017). Mathematical

Thinking and Quantitative Reasoning. Boston: Houghton Mifflin Company.

Bennett, J. & Briggs, W. (2015). Using & Understanding Mathematics: A Quantitative

Reasoning Approach. Boston: Pearson.

De MesQuita, E. B. & Fowler, A. (2021). Thinking Clearly with Data: A Guide to

Quantitative Reasoning and Analysis. Princeton: Princeton University Press.

Imai, K. (2017). Quantitative Social Science: An Introduction. Princeton: Princeton

University Press.

Pathfinder International. (2018). Budgeting Basics. Retrieved from

[Link]
20the%20Point%20-%20Budgeting%[Link]

88
Unit–5

FUNDAMENTALS OF GEOMETRY

Written by: Dr. Mubeshera Tufail

Reviewed by: Dr. Farah Naz Makhdoom

89
 INTRODUCTION

We live in a three-dimensional world, and much of our understanding of that world

is rooted in geometry. Surveying land for a new park, analyzing a satellite
photograph of the Earth, navigating a ship at sea, and creating a medical image all
rely on ideas that originated with the ancient Greeks. You can find the perimeter of
a geometric shape like a circle or square with a simple formula. But what if you
want to find the perimeter of a natural object with jagged edges such as a fern leaf?
Geometry is a branch of mathematics that explores the properties, shapes, sizes,
and relationships of various figures and spaces. From simple lines and angles to
complex three-dimensional shapes, geometry plays a fundamental role in
understanding the structures and patterns that surround us in the physical world.
In this unit, we will explore the basic concepts and principles of geometry, laying
the groundwork for further exploration and discovery. Through engaging activities,
interactive lessons, and real-world examples, we will delve into the fascinating
realm of geometric shapes, measurements, and transformations.
Whether you are new to geometry or looking to refresh your understanding of
geometric concepts, this unit will provide you with the tools and knowledge to
navigate the rich terrain of geometry with confidence and enthusiasm. By the end
of this unit, you will have developed a solid foundation in geometry, enabling you
to analyze shapes, solve geometric problems, and appreciate the beauty and
elegance of geometric relationships.

LEARNING OUTCOMES
After completing the unit, you will be able to:
1. Develop a fundamental understanding of geometric concepts such as points,
lines, angles, and shapes.
2. Identify and classify different types of geometric figures, including polygons,
circles, and solids.
3. Demonstrate proficiency in measuring and calculating geometric properties,
such as length, area, perimeter, volume, and surface area.
4. Recognize the practical applications of geometry in various fields, such as
architecture, engineering, art, and design.
5. Develop spatial awareness and visualization skills to analyze and manipulate
geometric figures in two-dimensional and three-dimensional space.
6. Utilize geometric reasoning and problem-solving strategies to tackle real-
world problems and mathematical challenges.

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5.1 Introduction to Geometry
The word geometry literally means “earth measure.” Many ancient cultures
developed geometrical methods to survey flood basins around agricultural fields
and to establish patterns of planetary and star motion. However, geometry was
always more than just a practical science, as we can see from the use of geometric
shapes and patterns in ancient art.

The Greek mathematician Euclid (c. 325–270 B.C.E.) summarized Greek

knowledge of geometry in a 13-volume textbook called Elements. The geometry
described in Euclid’s work, now called Euclidean geometry, is the familiar
geometry of lines, angles, and planes.

5.2 Points, Lines and Planes

Geometric objects, such as points, lines, and planes, represent idealizations that do
not exist in the real world. A geometric point is imagined to have zero size. No real
object has zero size, but many real phenomena approximate geometric points. Stars,
for example, appear as points of light in the night sky.

A geometric line is formed by connecting two points along the shortest possible
path. It has infinite length and no thickness. Because no physical object is infinite
in length, we usually work with line segments or pieces of a line. A long taut wire
is a good approximation to a line segment. A geometric plane is a perfectly flat
surface that has infinite length and width, but no thickness. A smooth tabletop is a
good approximation to a segment of a plane.
Table 5.1

Point

Line

Plane

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5.3 Plane Geometry
Plane geometry is the geometry of two-dimensional objects. Here we examine
problems involving circles and polygons, which are the most common two-
dimensional objects.
All points on a circle are located at the same distance—the radius—fr the circle’s
center. The diameter of a circle is twice its radius, which means it is the distance
across the circle on a line passing through its center.

Figure 5.1. Circle

A polygon is any closed shape in the plane made from straight-line segments. The
root poly comes from a Greek word for “many,” so a polygon is a many-sided
figure. A regular polygon is a polygon in which all the sides have the same length
and all interior angles are equal. Table 10.1 shows several common regular
polygons and their names.

Figure 5.2. Shapes of Polygons

Table 5.2: Shapes and Sides of Polygons

Sides Name Picture Sides Name Picture
Equilateral
3 6 Regular Hexagon
Triangle

4 Square 8 Regular Octagon

5 Regular Pentagon 10 Regular Decagon

Triangles are among the most important of all polygons, and they take many
different forms. All three sides of an equilateral triangle have equal length, making
it a regular polygon. An isosceles triangle has exactly two sides of equal length. A
right triangle contains one right (90°) angle. By sketching some triangles—
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particularly triangles with one very large angle and two very small angles - you can
observe that the sum of the three angle measures of a triangle is always 180°.

Figure 5.3. Different types of triangles

5.3.1 Perimeter
The perimeter of a plane object is simply the length of its boundary. We can find
the perimeter of a polygon by adding the lengths of the individual edges. The
perimeter of a circle, called the circumference, is related to its diameter or radius
by the universal constant ‘π’ (pronounced “pie”), which has a value of
approximately 3.14:

Circumference of circle = π × diameter = π × d

= 2 × π × radius = 2 × π × r

Table 5.3: Formula for Perimeter and Area of Two-Dimensional Shapes

Shape of object Picture Formula for Perimeter Area

Circle 2πr = πd πr2

Square 4l l2

Rectangle 2l + 2w lw

Parallelogram 2l + 2w lh

Triangle a+b+c ½ bh

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 Example
You have built a stairway in a new house and want to cover the triangular space
beneath the stairs with plywood. The figure shows the region to be covered. What
is the area of this region?

Solution: The region to be covered is

triangular, with a base of 12 feet and
height of 9 feet. The area of this triangle is:

area = 1/2 × b × h
= 1/2 × 12 ft × 9 ft
= 54 ft2

The area of the region to be covered is

54 square feet.

5.4 Three-Dimensional Geometry

Two of the most important properties of a three-dimensional object, such as a box
or a sphere, are its volume and its surface area. Figure 5.4 given below gives the
names of several familiar three-dimensional objects, along with their volume and
surface area formulas. Some of the formulas in Figure 5.4 given below are easily
understandable. For example, the volume formula for a box or a cube is just the
familiar “length × width × height” formula. The surface area formula for a box or
a cube is the result of adding the areas of the six (rectangular) faces of the object.

Figure 5.4. Formula of Surface Area and Volume of three-dimensional objects

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 Example
A water reservoir has a rectangular base that measures 30 meters by 40 meters
and vertical walls 15 meters high. At the beginning of the summer, the reservoir
was filled to capacity. At the end of the summer, the water depth was 4 meters.
How much water was used?

Solution: The reservoir has the shape of a rectangular prism, so the volume of
water in the reservoir is its length times its width times its depth. When the
reservoir was filled at the beginning of the summer, the volume of water was:
30 m × 40 m × 15 m = 18,000 m3

At the end of the summer, the amount of water remaining was:

30 m × 40 m × 4 m = 4800 m3

Therefore, the amount of water used was 18,000 m3 – 4800 m3 = 13,200 m3.

5.5 Scaling Laws

Scaling is a process by which a real object is modeled by a similar object whose
dimensions are proportionally larger or smaller. For example, an architect might
make a scale model of an auditorium in which all lengths are smaller by a factor of
100 or a biologist might make a scale model of a cell in which all lengths are larger
by a factor of 10,000.

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Suppose that we make an engineering model of a car with a scale factor of 10. The
actual car is 10 times as long, 10 times as wide, and 10 times as tall as the model
car. How are the surface area and volume of the actual car related to the surface
area and volume of the model? Consider the area of the car roof, which is its length
times its width. Because the length and width of the actual car roof are each 10
times their size in the model, the area of the actual car roof is:

Actual Roof of Area = Actual roof length × Actual roof width

= (10 × model roof length) × (10 × model roof width)
= 102 × model roof length × model roof width
= 102 × model roof area

That is, the actual roof area is greater than the model roof area by the square of the
scale factor (102 = 100, in this case).

We can do a similar calculation for the volume by considering, for example, the
box-shaped (rectangular prism) passenger compartment.

Actual Volume = Actual length × Actual width × Actual height

= (10 × model length) × (10 × model width) × (10 × model height)
= 103 × model length × model width × model height
= 103 × model volume

The actual car volume is greater than the model car volume by the cube of the scale
factor (103 = 1000, in this case).

5.6 Surface Area to Volume Ratio

Another important concept in scaling is the relative scaling of areas and volumes.
We define the surface-area-to-volume ratio for any object as its surface area
divided by its volume:
Surface-area-to-volume ratio = surface area
volume
Because surface area scales with the square of the scale factor and volume scales
with the cube of the scale factor, the surface-area-to-volume ratio must scale with
the reciprocal of the scale factor:
scale factor 2 1
scaling of surface-area-to-volume ration = 3

(scale factor) scale factor

Therefore, when an object is “scaled up,” its surface-area-to-volume ratio

decreases. When an object is “scaled down,” its surface-area-to-volume ratio

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increases. Larger objects have smaller surface-area-to-volume ratios than similarly
proportioned small objects. Smaller objects have larger surface-area-to-volume
ratios than similarly proportioned large objects.

SUMMARY

In this unit, we have explored the fundamental concepts and principles that
underpin the study of geometry from the simplicity of points and lines to the
complexity of three-dimensional solids. Throughout this unit, we have developed
a deeper understanding of geometric figures, their properties, and their applications
in various fields. We have honed our skills in measuring and calculating geometric
quantities from lengths and areas to volumes and surface areas, enabling us to
analyze and solve problems with confidence and precision.

As we move forward, let us carry forward the knowledge and skills gained from
this unit, continuing to explore and appreciate the wonders of geometry in our daily
lives. Whether in architecture, engineering, art, or design, the principles of
geometry will continue to shape and inspire our understanding of the world and our
place within it.

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 EXERCISES
Multiple Choice Questions
1. Which of the following is true about a plane in geometry?
a) It has only one dimension.
b) It has two dimensions and extends infinitely.
c) It has three dimensions and a fixed size.
d) It is the line where two surfaces meet.
Answer: b) It has two dimensions and extends infinitely.

2. What is the perimeter of a rectangle with a length of 8 units and a width of 5

units?
a) 13 units
b) 26 units
c) 40 units
d) 48 units
Answer: b) 26 units

3. In geometry, what is a point?

a) A line that extends infinitely in one direction
b) A flat surface with no thickness
c) An exact location with no size or dimension
d) A measurable length between two lines
Answer: c) An exact location with no size or dimension

4. What is the formula for the perimeter of a circle?

a) π×r2
b) 2πr
c) πr
d) 4r
Answer: b) 2πr

5. Which geometric shape does not have a defined perimeter?

a) Circle
b) Square
c) Point
d) Rectangle
Answer: c) Point

6. A triangle has sides of 3 cm, 4 cm, and 5 cm. What is its perimeter?
a) 9 cm
b) 12 cm
c) 15 cm
d) 18 cm
Answer: b) 12 cm

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7. What is the relationship between a line and a plane?
a) A plane contains at least three lines.
b) A line is the intersection of two planes.
c) A plane is formed by one line.
d) A line cannot lie on a plane.
Answer: b) A line is the intersection of two planes.

8. What is scaling in geometry?

a) Increasing the length of one side of a shape
b) Enlarging or reducing the size of a shape proportionally
c) Drawing multiple shapes on the same plane
d) Measuring the perimeter of a shape
Answer: b) Enlarging or reducing the size of a shape proportionally

9. How many edges does a triangle have?

a) 2
b) 3
c) 4
d) 6
Answer: b) 3

10. What is the perimeter of a square with a side length 6 units?

a) 12 units
b) 24 units
c) 18 units
d) 36 units
Answer: b) 24 units

Short-Answer Questions
1. Define a point, line, and plane in geometry.
2. Write the formula for the perimeter of a circle, rectangle, and triangle.
3. How does scaling affect the dimensions of a geometric figure?
4. What is the perimeter of a parallelogram if its sides are 6 cm and 8 cm?
5. Explain the difference between a line segment and a line.
6. Give an example of a situation where scaling is used in real life.
7. How do you find the perimeter of a square?
8. State any two characteristics of a plane in geometry.
9. What is the significance of the perimeter in geometry?
10. Write the formula for the perimeter of a parallelogram and explain it briefly.

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Subjective Questions
1. a) Define and differentiate between a point, line, and plane.
b) Provide real-life examples of each.

2. a) Explain the concept of perimeter.

b) Calculate the perimeter of a rectangle with a length 10 cm and width 7
cm, a circle with a radius of 4 cm, and a triangle with sides of 5 cm, 6
cm, and 7 cm.
3. a) Explain the concept of scaling in geometry.
b) Provide examples of how scaling is used in architecture and map-making.
4. a) Why is calculating the perimeter important in construction and
landscaping?
b) A rectangular garden has a length of 20 m and a width of 10 m. A fence
is to be built around it. What is the total length of the fence needed?
5. a) Discuss the properties of a square and a parallelogram in detail.
b) How are these shapes used in design and engineering?

6. Explain scaling laws and its implications in real-life.

REFERENCES

Aufmann, R. N., Lockwood, J.S., Nation, R. D. & Clegg, D. K. (2017). Mathematical

Thinking and Quantitative Reasoning. Boston: Houghton Mifflin Company.

Bennett, J. & Briggs, W. (2015). Using & Understanding Mathematics: A Quantitative

Reasoning Approach. Boston: Pearson.

De MesQuita, E. B. & Fowler, A. (2021). Thinking Clearly with Data: A Guide to

Quantitative Reasoning and Analysis. Princeton: Princeton University Press.

Imai, K. (2017). Quantitative Social Science: An Introduction. Princeton: Princeton

University Press.

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Unit–6

SETS AND ALGEBRAIC

EXPRESSIONS

Written by: Dr. Mubeshera Tufail

Reviewed by: Dr. Farah Naz Makhdoom

101
 INTRODUCTION

In mathematics, sets and algebraic expressions are foundational concepts that serve
as building blocks for a wide range of mathematical topics and applications. Sets
provide a framework for organizing and categorizing elements, while algebraic
expressions offer a language for representing mathematical relationships and
patterns.

In this unit, we will embark on an exploration of sets and algebraic expressions,

uncovering their significance and relevance in various mathematical contexts. We
will begin by delving into the basic concepts of sets. Through interactive examples
and exercises, we will learn how to represent, manipulate, and analyze sets to solve
problems and draw conclusions.

Building upon our understanding of sets, we will then transition to the realm of
algebraic expressions. We will explore the fundamentals of algebra, including
variables, constants, coefficients, and terms. By mastering algebraic expressions,
we will gain the ability to represent mathematical relationships symbolically and
manipulate expressions to simplify and solve equations. Throughout this unit, we
will emphasize the connections between sets and algebraic expressions,
highlighting how these concepts complement and inform each other. We will also
explore practical applications of sets and algebraic expressions in various fields
from mathematics and science to economics and engineering.

LEARNING OUTCOMES

After completing the unit, you would be able to:

1. Understand the fundamental concepts of sets, including elements, subsets,
unions, intersections, and complements.
2. Identify and analyze patterns in algebraic expressions, including variables,
constants, coefficients, and terms.
3. Solve equations and inequalities involving algebraic expressions, and
interpret the solutions in the context of the problem.
4. Explore real-world applications of sets and algebraic expressions in various
fields, such as statistics, economics, and computer science.
5. Develop critical thinking and problem-solving skills through the application
of sets and algebraic expressions to solve complex problems.

102
6.1 Sets and their Operations
A set is a collection of distinct objects, considered as an entity. These objects are
called elements or members of the set. Sets are denoted by curly braces {}, and the
elements are listed within the braces, separated by commas. Sets can be finite or
infinite. For example:
A = {1, 2, 3, 4, 5} is a set containing the numbers 1, 2, 3, 4, and 5.
B = {apple, orange, banana} is a set containing the fruits apple, orange,
and banana.
C = {x | x is a prime number less than 10} is a set defined by a property;
in this case, containing prime numbers less than 10.

There are different types of sets as given below:

i. The universal set contains all the elements for the sample. For example, the
universal set of digits is:
D = {0, 1, 2, 3, 4, 5, 6, 7, 8, 9}

The set of all students in a school (Universal set) contains students from
various classes (subsets). The set of all fruits available in a market (Universal
set) includes subsets like apples, bananas, and oranges.

ii. A subset is a set whose elements all belong to another set. For example, set
Q is, the set of odd digits Q = {1, 3, 5, 7, 9} is a subset of set D.
𝑄 ⊂ 𝐷 (Q is a subset of D)

The set of all fruits available in a market (Universal set) includes subsets like
apples, bananas, and oranges. So, the set of apples is a subset of the universal
set of all the fruits available in a market. The set of all teachers in a school is
a subset of the universal set of all staff members in the school.

iii. Complement includes all the elements of the universal set that do not belong
to a subset of it. For example, 𝑄′ = {0, 2, 4, 6, 8} is the complement of Q.
Notation used is the prime symbol, 𝑄′ or not Q.

If the universal set is the set of all students in a class and A is the set of
students who play cricket, the complement of A is the set of students who do
not play cricket.
Example 2: If the universal set is all days of the week and B is the set of
weekdays, the complement of B is the set of weekend days.

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iv. The empty set is a set with no elements. For example, the set of odd numbers
that are divisible by 2 is the empty set. Notation used: { } or Ø. For example,
the set of people taller than 20 feet,

v. Disjoint sets are two or more sets having no elements in common. For
example, the set of fruits and set of vegetables are disjoint. For example, if
set A is the set of cats and B is the set of laptops, both sets are disjoint sets
because they have no common element.

vi. Finite set is a set with a countable number of elements. For example, the set
E ={2, 4, 6, 8}, the set of all books in a library (countable), and the set of all
players in a cricket team (11 players).

vii. Infinite set is a set with an infinite number of elements. For example, the set
of natural numbers, N = {1, 2, 3, …}, the set of all stars in the universe, and
the set of all people living on Earth over time (uncountable).

Operations on sets include union, intersection and difference.

S# Set Notation Meaning Example
1. 𝐴∪𝐵  Any element that is 1) Set A: People who travel by car.
A union B in either of the sets Set B: People who travel by bike.
A OR B  Any element that is Union (A∪B): People who travel by car,
in at least one of the bike, or both.
sets 2) Set A: Students who play football.
Set B: Students who play basketball.
Union (A∪B): Students who play football,
basketball, or both.
2. 𝐴∩𝐵 Only elements that are 1) Set A: People who travel by car.
An in both A and B Set B: People who travel by train.
intersection B Intersection (A∩B): People who travel by
A AND B both car and train.
2) Set A: Students who play football.
Set B: Students who play basketball.
Intersection (A∩B): Students who play
both football and basketball.
3. A\ B Elements found in set A 1) Set A: Students who participate in sports.
A minus B but excluding the ones Set B: Students who participate in a speech
that are also in set B competition.
A∖B: Students who participate in sports
but not in the speech competition.
2) Set A: People who use public
transportation.
Set B: People who use private vehicles.
A∖B: People who use public transportation
but do not own private vehicles.

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4. 𝐴′ All elements in the 1) Universal Set: All students in the
A compliment universal set outside of school.
Not A A Set A: Students who participate in
sports.
Complement (𝐴′): Students who do not
participate in sports.
2) Universal Set: All internet users.
Set A: People who use Facebook.
Complement (A′): People who do not
use Facebook.

Self-Assessment Questions
1. Universal Set U: {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}
Set A: {2, 4, 6, 8}, Set B: {4, 5, 6, 7}
 A∪B (union).
 A∩B (intersection).
 A∖B (elements in A but not in B).
 A′ (complement of A).

2. Set A: Students who play cricket.

Set B: Students who play football. Find
 A∪B.
 A∩B.
 A∖B.
 B∖A represent?

3. Universal Set (U): All employees in a company.

A: Employees who have completed training in data analysis.
B: Employees who have completed training in marketing. Find
 A∪B
 A∩B
 A∖B
 A′

4. A: Students who participate in art club.

B: Students who participate in science club.
If A: {Ali, Sara, Hina, Ahmed} and B: {Sara, Ahmed, Zain}, find:
 A∪B
 A∩B
 A∖B

105
6.2 Algebra
Algebra is a branch of mathematics that deals with symbols and the rules for
manipulating those symbols. It involves solving equations, working with variables,
and studying mathematical expressions. Algebra is fundamental to many areas of
mathematics and is used extensively in various fields such as physics, engineering,
computer science, economics, and more. A major goal of algebra is to solve
equations for some variables. Here we review four basic rules that are often useful
in this process.

6.3 Algebraic Expressions

Algebraic expressions are mathematical expressions that involve variables,
constants, and mathematical operations (such as addition, subtraction,
multiplication, division, exponentiation, and roots). These expressions can
represent quantities or relationships between quantities. Variables in algebraic
expressions can take on different values, and the expression's value may change
accordingly. For example:
(i) 2x + 3 is an algebraic expression where x is a variable.
(ii) 3x2 – 5x + 2 is another algebraic expression.
(iii) a + b is an algebraic expression where a and b are variables.
(iv) y = mx+b represents a linear equation, where m and b are constants
representing the slope and y-intercept, respectively.

Terms related to basic algebra expressions are mentioned in the image given below.
a) Exponent (1)
b) Expression (2)
c) Polynomial (Monomial, binomial and trinomial) (3)
d) Like terms and Unlike terms (4)
e) Constants (5)

Figure 6.1: Algebraic Expression

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Algebraic expressions are often used to model real-world situations, solve
equations, and perform calculations. While both sets and algebraic expressions are
foundational in mathematics, they serve different purposes: sets are used to
represent collections of objects, while algebraic expressions are used to represent
mathematical relationships and operations involving variables and constants.

6.4 Basic Rules of Algebra

Four basic rules of algebra are given below:
1. You can interchange the left and right sides of an equation. That is, if x = y,
it is also true that y = x.
2. You can add or subtract the same quantity on both sides of an equation.
3. You can multiply or divide both sides of an equation by the same quantity, as
long as you do not multiply or divide by zero.
4. You can raise both sides of an equation to the same power or take the same
root on both sides (which is equivalent to raising both sides to the same
fractional power).

Adding and Subtracting

Example 1: Solve the equation x - 9 = 3 for ‘x’.
Solution: We isolate ‘x’ by adding 9 to both sides:

x-9+9=3+9

Hence, x = 12

Example 2: Solve the equation y + 6 = 2y for ‘y’.

Solution: We put all terms with ‘y’ on the right side by subtracting ‘y’ from both
sides:
y + 6 - y = 2y - y

Interchanging the two sides, the answer is y = 6. Hence, 6 = y

Example 3: Solve the equation 8q - 17 = p + 4q - 2 for p.

Solution: We isolate p by subtracting 4q from both sides while also adding 2 to
both sides:
8q - 17 - 4q + 2 = p + 4q - 2 - 4q + 2
4q - 15 = p

Interchanging the two sides, the answer is p = 4q - 15.

107
Multiplying and Dividing
Example 1: Solve the equation 4x = 24 for ‘x’.
Solution: We isolate by dividing both sides by 4:
4x 24

4 4
Hence, x = 6.

Example 2: Solve the equation 3z - 2 = 10 for ‘z’.

4

Solution: First, we isolate the term containing z by adding 2 to both sides:

3z
–2 = +2=10+2
4
3z
 12
4

Now we multiply both sides by 4/3 on both sides:

3z 4 4
  12 
4 3 3

z= 16

Example 3: Solve the equation 7w = 3s + 5 for ‘s’.

Solution: We isolate the term containing ‘s’ by subtracting 5 from both sides:

7w - 5 = 3s + 5 - 5
7w - 5 = 3s

Next, we divide both sides by 3 to isolate ‘s’, then interchange the two sides to
write the final answer.
7w  5 3s

3 3
7w  5
s=
3

108
 Powers and Roots
Example: Find the positive solution of the equation x4 = 16.
Solution: We solve for by raising both sides to the 4th power:

(x4 )1/4 = 161/4

This leaves x on the left side (from the rule (xn)m = xn × m), and on the right, the
¼ power is the same as the fourth root:

x4 × ¼ = 16 ¼

x = 4√16 = 2

The positive solution to the equation is x = 2.

6.5 Quadratic Equation

A quadratic equation is a type of equation that can be written in the form:

ax2+bx+c=0
Where:
 x is the variable.
 a, b, and c are constants, with 𝑎 ≠ 0.

The equation involves the square of the unknown variable (𝑥2).

Example
Consider the quadratic equation:

𝑥2 +5𝑥 + 6 = 0
Here, a=1, b=5, and c=6.

Solution:
To solve for x, we can factor the equation. We look for two numbers that
multiply to give c (which is 6) and add up to give b (which is 5).

The numbers are 2 and 3, because:

2×3=6 and 2+3=5

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 Now, we can factor the quadratic equation as:

(x+2) (x+3)=0

To find the values of x, set each factor equal to zero:

x+2=0 or x+3=0

Solving these:
x = −2 or x = −3

Answer: The solutions to the equation x2 + 5x + 6 = 0 are x = −2 and x = −3.

6.5.1 Applications of Quadratic Equation

Quadratic equations are useful because they help solve many real-world problems,
especially when something is changing in a curved or non-linear way. Here are a
few examples of how quadratic equations are used in everyday life:
i. Throwing a Ball or Object (Projectile Motion): When you throw a ball into
the air, it follows a curved path. Quadratic equations are used to calculate how
high the ball will go, how long it will stay in the air, and where it will land.
For example, if you throw a ball, a quadratic equation can help you determine
the time it takes to hit the ground.
ii. Business and Finance: In business, quadratic equations can be used to
calculate profits, especially when profits increase and then decrease as a result
of factors like production costs or demand. For example, if a company makes
a certain number of sales and then finds that making more sales will lead to
higher costs, quadratic equations can help figure out the best number of sales
to maximize profit.
iii. Designing and Building (Architecture): In construction and design,
quadratic equations can help determine the best angles or sizes for structures.
For instance, if you're designing a ramp or arch, a quadratic equation can be
used to figure out the right curve for strength and safety.
iv. Planning and Time Management: Sometimes, problems in scheduling or
planning (like how long it will take to finish a project) can be modeled by
quadratic equations. It helps in finding out when certain tasks are best to
complete, especially when you’re dealing with increasing and decreasing time
limits.

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Self-Assessment Questions
1. The area of a rectangular garden is 120 square meters. The length is 5
meters more than the width. Find the dimensions (length and width) of the
garden.

Let the width be 𝑥. Then the length will be x+5. Use the equation for the
area of a rectangle:
x(x+5)=120
Solution:
The area of the garden is given by:
x(x+5)=120
Simplify:
x2+5x−120=0
Factor the quadratic equation:
(x−10)(x+12)=0

So, x=10 or x=−12. Since a negative width is not possible, the width is 10 meters.
The length is x+5=10+5=15 meters. So, the dimensions are 10 meters (width)
and 15 meters (length).

2. A ramp is being constructed for wheelchair access. The equation that

describes the ramp's slope is:
Y = −0.5x2 + 4x + 2
where y is the height and x is the horizontal distance. Find the height when the
ramp reaches 6 meters horizontally.

Solution:
The equation for the ramp’s slope is:
y = −0.5x2 + 4x + 2

We need to find the height when the horizontal distance is x=6 meters:
y = −0.5(6)2 + 4(6) + 2
y =−0.5(36)+24+2
y = −18 + 24 + 2 = 8

Answer: The height of the ramp at 6 meters is 8 meters.

111
3. An investment grows according to the equation:
A(t) = −0.5t2 + 5t + 1000
where A(t) is the amount of money in the account after t years. After how
many years will the amount in the account drop back to the initial
investment of Rs. 1000/-?

Solution:
The amount of money in the account is given by:
A(t) = −0.5t2 + 5t + 1000
We need to find when the amount drops back to the initial investment, i.e.,
A(t)=1000:
−0.5t2 + 5t + 1000 = 1000
Simplify:
−0.5t2 + 5t = 0
Factor:
t(−0.5t+5)=0
So, t=0 or t=10.

Answer: Since t=0 represents the initial time, the amount will drop back to Rs.
1000/- after 10 years.

4. A farmer has 100 meters of fencing to create a rectangular enclosure. The

length is 10 meters longer than the width. What are the dimensions of the
enclosure that will maximize the area?
Solution:
The farmer has 100 meters of fencing. The length is 10 meters more than the width.
Let the width be 𝑥, and the length will be x+10.
The perimeter is given by:
2(x+(x+10))=100
Simplify:
2(2x+10)=100
4x+20=100
4x=80
x=20

So, the width is 20 meters and the length is 20+10=30 meters.

The area will be:
A= 20 × 30 = 600 square meters

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 5. A tower is being built and its height after two years is given by:
h(t) = 10t2 + 50t + 100
Find the height of the tower after 3 years.

Solution:
The height of the tower after two years is given by:
h(t) = 10t2 + 50t + 100

Find the height after 3 years:

h(3) = 10(3)2 + 50(3) + 100
h(3) = 10(9) + 150 + 100 = 90 + 150 + 100 = 340meters

So, the height of the tower after 3 years is 340 meters.

SUMMARY

In this unit, we have covered the foundational principles of sets and algebraic
expressions, uncovering their roles as fundamental tools for mathematical
reasoning and problem-solving. We began by delving into the world of sets, where
we learned to define sets, and represent them using set notation. Transitioning to
algebraic expressions, we explored the language of algebra, where variables,
constants, and terms serve as the building blocks for mathematical expressions and
equations. By learning techniques for simplifying expressions and solving
equations, we developed the ability to analyze and manipulate algebraic
relationships with confidence and proficiency.

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 EXERCISES

Multiple Choice Questions

1. Which of the following represents the union of two sets A and B?
a) A∩B
b) A−B
c) A∪B
d) A⊂B
Answer: c) A∪B

2. What is the result of the intersection (A∩B) of sets A={1,2,3} and B={2,3,4}?
a) {1, 4}
b) {2, 3}
c) {1, 2, 3, 4}
d) {2, 3, 4}
Answer: b) {2, 3}

3. Which of the following is the complement of the set A={1,2,3} if the

universal set is U={1,2,3,4,5}?
a) {1, 2}
b) {4, 5}
c) {1, 2, 3}
d) {4}
Answer: b) {4, 5}

4. Simplify: 3x+5−2x+7.
a) 5x+12
b) x+12
c) 5x+7
d) x+5
Answer: b)

5. What is the solution of the quadratic equation x2 − 5x + 6 = 0?

a) x=1,6
b) x = −1, −6
c) x=2,3
d) x = −2, −3
Answer: c) x=2,3

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6. If the set A={a,b,c} and B={b,c,d}, what is A−B?
a) {a, b}
b) {a}
c) {b, c, d}
d) {d}
Answer: b) {a}

7. Simplify: 2x − 3(x − 2) = 5.
a) x = 3
b) x = 5
c) x = −5
d) x = 2
Answer: a) x = 3

8. What is the result of (A∪B)∩C if A={1,2}, B={2,3}, and C={3,4}?

a) {1, 2, 3}
b) {2, 3}
c) {3}
d) {1, 2, 3, 4}
Answer: c) {3}

9. Which of the following is the quadratic form of the equation x2 − 4x + 4 = 0?

a) x = 4
b) x = 2
c) x = 1
d) x = 0
Answer: b) x = 2

10. Which of the following is an example of an algebraic expression?

a) x + 2 = 5
b) 3x2 + 4x − 7
c) x = 3
d) x − 5
Answer: b) 3x2 + 4x – 7

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Short-Answer Questions
1. What is the union of two sets? Give an example.
2. Explain the difference between the complement and the intersection of sets.
3. Identifying and naming the patterns in algebraic expressions including
variables, constants, coefficients, and terms.
4. Define a quadratic equation and give an example.

Subjective Questions
1. Define the set and explain its components, including elements, subsets,
unions, intersections, and complements.
2. Discuss the applications of sets in our daily life.
3. Elaborate on the uses of quadratic equations in our daily life.
4. Solve the quadratic equation x2 + 6x + 9 = 0 by factoring.

5. Given two sets A={2,4,6} and B={1,4,5}, find A∪B, A∩B, and A−B.

REFERENCES
Aufmann, R. N., Lockwood, J.S., Nation, R. D. & Clegg, D. K. (2017). Mathematical
Thinking and Quantitative Reasoning. Boston: Houghton Mifflin Company.

Bennett, J. & Briggs, W. (2015). Using & Understanding Mathematics: A Quantitative

Reasoning Approach. Boston: Pearson.

De MesQuita, E. B. & Fowler, A. (2021). Thinking Clearly with Data: A Guide to

Quantitative Reasoning and Analysis. Princeton: Princeton University Press.

Imai, K. (2017). Quantitative Social Science: An Introduction. Princeton: Princeton

University Press.

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Unit–7

INTRODUCTION TO
STATISTICAL STUDIES

Written by: Dr. Mubeshera Tufail

Reviewed by: Dr. Farah Naz Makhdoom

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 INTRODUCTION

Statistics is a powerful tool for understanding the world around us by analyzing

data and drawing meaningful conclusions. In this unit, we will explore the essential
characteristics and various types of statistical studies, providing a foundation for
understanding how data are collected, analyzed, and interpreted in different
contexts. Statistical studies are essential for making informed decisions and
drawing accurate conclusions about populations. By understanding the
characteristics of statistical studies and the different types of study designs, we can
better interpret the results and evaluate the validity of statistical findings.

In this unit, we will begin by examining the fundamental characteristics of

statistical studies, including the population, sample, variables, and data collection
methods. We will explore the importance of randomization, bias, and reliability in
ensuring the validity of study results. Building upon this foundation, we will then
explore different types of statistical studies, including observational studies,
experiments, surveys, and retrospective studies. Each type of study design has its
strengths and limitations, and understanding these differences is crucial for
selecting the appropriate approach for a given research question. Throughout this
unit, we will emphasize the importance of critical thinking and skepticism in
evaluating statistical studies. By learning to recognize potential sources of bias and
error, we can become more discerning consumers of statistical information and
make more informed decisions in our personal and professional lives.

LEARNING OUTCOMES

After completing this unit, you will be able to:

1. Understand the fundamental characteristics of statistical studies, including
populations, samples, variables, and data collection methods.
2. Recognize the importance of randomization, bias, and reliability in ensuring
the validity of study results.
3. Differentiate between the various types of statistical studies, including
observational studies, experiments, surveys, and retrospective studies.
4. Interpret the strengths and limitations of each type of study design and
understand when it is appropriate to use them.
5. Develop critical thinking skills to evaluate the quality and validity of
statistical studies, including assessing potential sources of bias.
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6. Understand the techniques for selecting representative samples, minimizing
bias, and maximizing the reliability of study results.
7. Explore real-world examples of statistical studies and analyze how different
study designs are used to address research questions and inform decision-
making.
8. Apply the knowledge and skills gained from this unit to critically evaluate
research findings, make informed decisions, and communicate effectively
about statistical studies in various contexts.

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7.1 Introduction to Statistics
Statistics is defined as the science of collecting, organizing, presenting, analyzing
and interpreting numerical data for making a more effective decision. Statistics is
concerned with scientific methods for collecting, organizing, summarizing,
presenting and analyzing data as well as deriving valid conclusions and making
reasonable decisions on the basis of this analysis. Statistics is concerned with the
systematic collection of numerical data and its interpretation. The word ‘statistic’
can be referred to:
 Numerical facts, such as the number of people living in a particular area.
 The study of ways of collecting, analyzing and interpreting the facts or data.

The subject of statistics plays a major role in modern society. It is used to determine
whether a new drug is effective in treating a particular disease e.g., fever, pain or
Hepatitis, cancer, etc. It is involved when agricultural inspectors check the safety
of the food supply. It is used in every opinion poll and survey. In business, it is used
for market research. Sports statistics are part of daily conversation for millions of
people. Statistics can be divided into two main areas or branches.
(i) Descriptive Statistics: Descriptive statistics involve the procedures used to
describe a given collection of data. It covers the measures of central tendency,
variability frequency and percentages.
(ii) Inferential Statistics: Inferential statistics involve the procedures that let us
infer our findings beyond the particular sample at hand to the larger
population represented by that sample. It covers correlation, chi-square, t-test,
and ANOVA.

7.2 Steps of a Statistical Study

The basic steps of a study are given below:
(i) State the goal of your study. It involves determining the population you want
to study and exactly what you want to learn about it.
(ii) Choose a representative sample from the population.
(iii) Collect raw data from the sample and summarize these data by finding
sample statistics of interest.
(iv) Use the sample statistics to infer the population parameters.
(v) Draw conclusions: Determine what you learned and whether you achieved
your goal. The steps of the statistical study are evident in the image given
below.

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 Figure 7.1. Elements of Statistical Study

There are different ways to conduct a statistical study; we will discuss it in the
upcoming topic ‘types of statistical study’. Let us see an example of a statistical
study. Ali conducted a study to find out the favorite sports of the people of Pakistan.
He developed a survey form to collect the data from the people. For this study, Ali
approached 7000 people from various parts of the country (in order to get
representation from various provinces and parts of the country) and get their
responses on their favorite sports. Ali entered all the ratings in MS Excel, analyzed
the data by applying statistical formulas, and shared his results in the form of tables
and graphs. Notice here that Ali collected data only from 7000 people and shared
the results about the favorite sports of the people of Pakistan (imagine the total
population of the country as compared to 7000 people approached for collecting
data for this study). In Statistical language, we can say that the purpose of this study
was to find out the favorite sports of the people of Pakistan i.e., the population of
this study was all the people of Pakistan. The data about the favorite sports of the
people of Pakistan are called population parameters. Ali studied a smaller group
(i.e., a sample of the study) to learn about the population of the study (i.e., people
of Pakistan are a very large group of people). In this study, the sample consisted of
7000 people from various parts of the country. The individual forms, Ali received
from the sample with their responses about their favorite sports, represent the raw
data. Ali entered these responses into MS Excel or SPSS (MS Excel and SPSS can
be conveniently used for statistical data analysis), and presented the results in the
form of percentages in tables and graphs. These percentages or numbers are called
sample statistics.

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  Data is raw, unorganized facts that need to be processed. Data can be
something simple and seemingly random and useless until it is organized.
 The population in a statistical study is the complete set of people or
things being studied. The sample is the representative subset of the
population from which the raw data are actually obtained.
 We usually think of a population as a group of people. However, in
statistics, a population can be any kind of group—people, animals, or
things. For example, in a study of the tuition cost of college education,
the population might be all colleges and universities, and the population
parameters might include prices for tuition, fees, and housing.
 Experts have provided formulas and tables to decide about the size (e.g.,
number of subjects) of the sample for a given size of population. You
must select the appropriate option for the population (i.e., what is the exact
size or number of subjects of the population or if you do not know about
the size of the population, select the ‘unknown’ or ‘infinite’ size of the
population), you would get the appropriate size of sample for your study.
 Population parameters are specific numbers describing the
characteristics of the population. Sample statistics are numbers
describing characteristics of the sample, found by consolidating or
summarizing the raw data collected from the sample.

7.3 Sampling Techniques

A representative sample is a sample in which the relevant characteristics of the

sample members are generally the same as those of the population. The sampling
methods, commonly used, are given below:
i. Simple Random Sampling: In a simple random sampling technique, a
sample of items is chosen in such a way that every sample of the same size
has an equal chance of being selected.
ii. Systematic Sampling: In systematic sampling, the sample is chosen by
selecting every kth individual from the list, such as selecting every 10th or
every 50th member of the population.
iii. Convenience Sampling: Convenience sampling allows one to choose a
sample that is convenient to select, such as people who happen to be in the
same classroom.
iv. Stratified Sampling: We use this method when we are concerned about
differences among subgroups, or strata, within a population. We first identify
the subgroups and then draw a simple random sample within each subgroup.
The total sample consists of all the samples from the individual subgroups.

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1.4 Data and Its Types
Qualitative data describe qualities or categories. Quantitative data represent counts
or measurements. Essay grades are generally subjective because different teachers
might score the same essay differently. We say that the grade categories are
qualitative, because they represent qualities such as bad or good. In contrast, scores
on a multiple-choice exam are quantitative, because they represent an actual count
(or measurement) of the number of correct answers.

Data are collected for a variable. In statistics, a variable is any characteristic,

number, or quantity that can be measured or counted. Variables can take on
different values depending upon its characteristics.

Examples: Classify each of the following types of data as either qualitative or

quantitative.
a) Brand names of shoes in a consumer survey
b) Heights of students
c) Audience ratings of a film on a scale of 1 to 5, where 5 means excellent.

Solution
a) Brand names are non-numerical categories, so they are qualitative data.
b) Heights are measurements, so they are quantitative data.
c) Although the film rating categories involve numbers, the numbers represent
subjective opinions about a film, not counts or measurements. These data
are therefore qualitative, despite being stated as numbers.

The variables in your data can be classified into four types on the basis of the
measurement scale used to measure it.

Table 7.1: Types of data variables and the measurement scales

Type of Data Numerical Descriptive
Examples
Scale Characteristics Description Statistics
Nominal Classification but no Counting Gender Frequency in
order, distance, or (1=Male, each category
origin 2=Female) Percent in each
category
Mode

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 Ordinal Classification and Rank Academic status Median
order but no distance ordering (1=Freshman, Range
or unique origin 2=Sophomore, Percentile
3=Junior, ranking
4=Senior), Age
group, Income
level,
Employment
Status
Interval Classification, order, Arithmetic Temperature in Mean
and distance but no operations degrees Standard
unique origin that preserve Satisfaction on deviation
order and semantic Variance
magnitude differential scale
Ratio Classification, order, Arithmetic Age in years Geometric
distance and unique operations Income in Saudi mean
origin on actual riyals Coefficient of
quantities variation

The data at nominal and ordinal scales are represented with respect to their category
names. However, while using software like SPSS for quantitative/statistical
analysis, these categories may be assigned some numerical code for easy
calculations. This numerical code does not represent the value of that category (it
is only applicable to nominal and ordinal scales) but it only serves the identity or
differentiation of one category from the other categories of that variable (see the
example in the table given above).

7.5 Binning Data

When we deal with quantitative data categories, it is often useful to group, or bin,
the data into categories that cover a range of possible values. For example, in a
table of income levels, it might be useful to create bins of Rs. 0/- to Rs. 20,000/-,
Rs. 20,001/- to Rs. 40,000/-, and so on. In this case, the frequency of each bin is
simply the number of people with incomes in that bin.

Example: Consider the following set of 20 scores from a 100-point exam:

76 80 78 76 94 75 98 77 84 88 81 72 91 72 74 86 79 88 72 75
Determine appropriate bins, and make a frequency table.

Solution: The scores range from 72 to 98. One way to group the data is with 5-point
bins.

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 The first bin represents scores from 95 to 99, the second bin represents scores
from 90 to 94, and so on. Note that there is no overlap between bins. We then
count the frequency (the number of scores) in each bin. For example, only 1 score
is in bin 95 to 99 (the high score of 98) and 2 scores are in bin 90 to 94 (the scores
of 91 and 94). Table given below shows the complete frequency table. In this
case, we interpret the cumulative frequency of any bin to be the total number of
scores in or above that bin. For example, the cumulative frequency of 6 for the
bin 85 to 89 means that 6 scores are either between 85 and 89 or higher than 89.

Table 7.2: Frequency table for binned data

Scores Frequency
95-99 1
90-94 2
85-89 3
80-84 3
75-79 7
70-74 4
Total 20

7.6 Types of a Statistical Study

Broadly speaking, most statistical studies fall into one of three categories: surveys,
observational studies and experiments. In an observational study and surveys,
researchers observe or measure the characteristics of the sample members but do
not attempt to influence or modify these characteristics. In an experiment,
researchers apply a treatment to some or all of the sample members and then
observe the effects of the treatment. The study conducted by Ali, is an observational
study. The study conducted to check the after-effects of a medicine for vitamin C
is an example of an experiment.

It is difficult to determine whether an experimental treatment works unless you

compare groups that receive the treatment to groups that do not. In the vitamin C
study, for example, researchers might create two groups of people: a treatment
group that takes large doses of vitamin C and a control group that does not take
vitamin C. The treatment group in an experiment is the group of sample members
who receive the treatment being tested. The control group in an experiment is the
group of sample members who do not receive the treatment being tested. An
experiment is single-blind if the participants do not know whether they are
members of the treatment group or members of the control group, but the
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experimenters do know. An experiment is double-blind if neither the participants
nor the experimenters (people administering the treatment) know who belongs to
the treatment group and who belongs to the control group. It is important for the
treatment and control groups to be selected randomly and to be alike in all respects
except for the treatment.

Having a control group is usually crucial to interpreting the results of experiments.

In an experiment, it is important for the treatment and control groups to be alike in
all respects except for the treatment. For example, if the treatment group consisted
of active people with good diets and the control group consisted of sedentary people
with poor diets, we could not attribute any differences in colds to vitamin C alone.
To avoid this type of problem, assignments to the control and treatment groups
must be done randomly.

A case-control study (or retrospective study) is an observational study that resembles

an experiment because the sample naturally divides into two (or more) groups. The
participants who engage in the behavior under study form the cases, which makes them
like a treatment group in an experiment. The participants who do not engage in the
behavior are the controls, making them like a control group in an experiment.

The margin of error in a statistical study is used to describe a confidence interval

that is likely to contain the true population parameter. We find this interval by
subtracting and adding the margin of error from the sample statistic obtained in the
study. That is, the confidence interval is
from (sample statistic - margin of error)
to (sample statistic + margin of error)

In social sciences, we assume the confidence interval of 95% with a margin of error of
5% whereas in physical and medical sciences, a valid and effective study must assume
the confidence interval of 99% with a margin of error of 1%. Please read about the
importance and reason for this limit of confidence interval in various fields. What
impact does the margin of error have on the study results and its implications?

Examples:
For each of the following questions, which type of statistical study is most
appropriate to lead to an answer? Give a reason for your answer.
a) What is the average income of a computer engineer?
b) Do seat belts save lives?
c) Can lifting weights improve runners’ times in a 10-kilometer race?
d) Can a new herbal remedy reduce the severity of colds?

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7.7 Evaluating a Statistical Study
There are eight guidelines for evaluating a statistical study, as given below.
1. Get a big picture view of the study: You should understand the goal of the
study, the population that was under study, and whether the study was
observational or an experiment.
2. Consider the source: Statistical studies are supposed to be objective, but the
people who carry them out and fund them may be biased. Look for any
potential sources of bias on the part of the researchers.
3. Look for bias in the sample: Decide whether the sample is the true
representative of the population. Selection bias occurs whenever researchers
select their sample in a way that tends to make it unrepresentative of the
population. For example, a pre-election poll that surveys only registered
voters who are workers of one particular political party, has selection bias
because it is unlikely to reflect the opinions of all voters. Participation bias
occurs whenever people choose whether to participate. For example, if
participation in a survey is voluntary, people who feel strongly about the
survey issue are more likely to participate, so their opinions may not represent
the larger population that is less emotionally attached to the issue. (Surveys
or polls in which people choose whether to participate are often called self-
selected or voluntary response surveys.)
4. Look for problems in defining or measuring the variables of interest: A
variable is any item or quantity that can vary or take on different values. The
variables of interest in a statistical study are the items or quantities that the study
seeks to measure. For example, in the previous example at the start of this unit,
Ali studied about favorite sports and the number of playing those sports.
Ambiguity in the variables can make it difficult to interpret reported results.
5. Beware of confounding variables: Variables that are not intended to be part
of the study can sometimes make it difficult to interpret results properly. Such
variables are often called confounding variables, because they confound
(confuse) a study’s results. Confounding variables can be discovered simply
by thinking hard about factors that may have influenced a study’s results. If
the study neglected potential confounding variables, the results of the study
may not be valid.
6. Consider the setting and wording in surveys: Look for anything that might
tend to produce inaccurate or dishonest responses. Dishonest responses are
particularly likely when the survey concerns sensitive subjects, such as personal
habits or income. For example, the question “Do you cheat on your income
taxes?” may/may not elicit honest answers from those who cheat, especially if
the setting of the study does not guarantee complete confidentiality.

127
 Sometimes just the order of the words in a question can affect the outcome.
A poll conducted in Germany asked the following two questions:
(i) Would you say that traffic contributes more or less to air pollution than
industry?
(ii) Would you say that industry contributes more or less to air pollution
than traffic?

The only difference is the order of the words traffic and industry, but this
difference dramatically changed the results in the study. With the first
question, 45% answered traffic and 32% answered industry. With the second
question, only 24% answered traffic while 57% answered industry.
7. Check that results are presented fairly: Even when a statistical study is
done well, it may be misrepresented in graphs or concluding statements.
Check whether the study really supports the conclusions that are presented in
the media.
8. Stand back and consider the conclusions: Evaluate whether the study
achieved its goals. If so, do the conclusions make sense and have practical
significance? Are there any alternative explanations for the results?

Example 1
Radon is a radioactive gas produced by natural processes (the decay of uranium)
in the ground. The gas can leach into buildings through the foundation and can
accumulate in relatively high concentrations if doors and windows are closed.
Imagine a study that seeks to determine whether radon gas causes lung cancer by
comparing the lung cancer rate in Colorado, where radon gas is fairly common,
with the lung cancer rate in Hong Kong, where radon gas is less common.
Suppose the study finds that the lung cancer rates are nearly the same. Is it fair
to conclude that radon is not a significant cause of lung cancer?

Solution: The variables under study are the amount of radon and lung cancer
rate. However, because smoking can also cause lung cancer, the smoking rate
may be a confounding variable in this study. In particular, the smoking rate in
Hong Kong is much higher than the smoking rate in Colorado, so any conclusions
about radon and lung cancer must take the smoking rate into account. In fact,
careful studies have shown that radon gas can cause lung cancer, and the U.S.
Environmental Protection Agency (EPA) recommends taking steps to prevent
radon from building up indoors.

128
 Example 2
An experiment is conducted in which the weight losses of people who try a new
“Fast Diet Supplement” are compared to the weight losses of a control group of
people who try to lose weight in other ways. After eight weeks, the results show
that the treatment group lost an average of ½ pounds more than the control group.
Assuming that it has no dangerous side effects, does this study suggest that the
Fast Diet Supplement is a good treatment for people wanting to lose weight?

Solution: Compared to the average person’s body weight, the difference of 1

pound hardly matters at all. So even if the study is flawless, the results do not
seem to have much practical significance.

SUMMARY

Throughout this unit, we have journeyed through the essential characteristics of

statistical studies and explored the various types of study designs used to collect
and analyze data. We began by understanding the fundamental components of
statistical studies, including populations, samples, variables, and data collection
methods. We learned about the importance of randomization and bias in ensuring
the validity of study results, and we developed critical thinking skills to evaluate
the quality and validity of statistical studies.

Building upon this foundation, we explored different types of statistical studies,

including observational studies, experiments, surveys, and retrospective studies.
We recognized the strengths and limitations of each type of study design and
learned when it is appropriate to use them based on the research question and
context. With a solid understanding of the characteristics and types of statistical
studies, we are better equipped to make informed decisions, communicate
effectively about statistical findings, and contribute to evidence-based decision-
making in our personal and professional lives.

129
 EXERCISES
Multiple Choice Questions
1. Which of the following is an example of descriptive statistics?
a) Predicting election results
b) Calculating the average score of a class
c) Testing the effectiveness of a new drug
d) Estimating population size
Answer: b) Calculating the average score of a class
2. Which step is NOT part of a statistical study?
a) Collecting data
b) Analyzing data
c) Changing results
d) Drawing conclusions
Answer: c) Changing results
3. What is the primary goal of inferential statistics?
a) To summarize data
b) To make predictions about a population based on a sample
c) To calculate averages
d) To present data visually
Answer: b) To make predictions about a population based on a sample
4. Which type of probability sampling involves selecting every nth individual
from a population?
a) Simple random sampling
b) Systematic sampling
c) Stratified sampling
d) Cluster sampling
Answer: b) Systematic sampling
5. In which type of probability sampling is the population divided into
subgroups, and samples are taken from each subgroup?
a) Simple random sampling
b) Systematic sampling
c) Stratified sampling
d) Cluster sampling
Answer: c) Stratified sampling
6. What is meant by binning data?
a) Sorting data in ascending order
b) Grouping data into intervals
c) Ignoring missing data
d) Calculating statistical measures
Answer: b) Grouping data into intervals
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7. What type of data is “eye color”?
a) Quantitative
b) Qualitative
c) Continuous
d) Discrete
Answer: b) Qualitative

8. Which of the following is a continuous variable?

a) Number of students in a class
b) Weight of a person
c) Number of cars in a parking lot
d) Type of vehicles owned
Answer: b) Weight of a person

9. Which sampling technique ensures each member of the population has an

equal chance of being selected?
a) Cluster sampling
b) Stratified sampling
c) Simple random sampling
d) Convenience sampling
Answer: c) Simple random sampling

10. What is the first step of a statistical study?

a) Collecting data
b) Formulating a hypothesis
c) Identifying the problem or question
d) Analyzing results
Answer: c) Identifying the problem or question

11. In evaluating a statistical study, what is crucial to assess?

a) The clarity of the conclusion
b) The relevance of the hypothesis
c) The design and methods used
d) All of the above
Answer: d) All of the above

Short-Answer Questions
1. Define descriptive and inferential statistics with one example each.
2. What are the key steps in conducting a statistical study?
3. Differentiate between random and non-random sampling techniques.
4. Explain the concept of binning data with an example.
5. What are the two main types of data? Provide an example for each.

131
Subjective Questions
1. Discuss the importance of descriptive and inferential statistics in decision-
making. Include examples where each type is used effectively in real life.
2. Describe the different sampling techniques. Discuss their advantages and
disadvantages with examples.
3. Explain the types of statistical studies. Highlight their differences and give
examples of scenarios where each type is appropriate.
4. Evaluate the importance of properly designed statistical studies. Discuss the
common errors that might occur during data collection and analysis.
5. Analyze a scenario of your choice using the steps of a statistical study. For
example, conduct a basic survey to analyze students' preferences for different
subjects.
6. Based on the information provided for each study, what suggestions or
comments will you give to make it an effective study with respect to the
design of the study, sampling, and other aspects?
(i) Researchers planned a survey study to determine whether people living
in rural areas are happier than those living in urban areas.
(ii) A government study is designed to determine the percentage of
taxpayers who understate their income, based on people who had their
tax returns audited.
(iii) In a study designed to determine whether bicyclists who wear helmets
have fewer accidents, researchers tracked 500 riders with helmets for
one month.
(iv) In a study of obesity among children, researchers monitor the eating and
exercise habits of the participating children, carefully recording everything
they eat and all their activities.

REFERENCES
Aufmann, R. N., Lockwood, J.S., Nation, R. D. & Clegg, D. K. (2017). Mathematical
Thinking and Quantitative Reasoning. Boston: Houghton Mifflin Company.
Bennett, J. & Briggs, W. (2015). Using & Understanding Mathematics: A Quantitative
Reasoning Approach. Boston: Pearson.
De MesQuita, E. B. & Fowler, A. (2021). Thinking Clearly with Data: A Guide to
Quantitative Reasoning and Analysis. Princeton: Princeton University Press.
Imai, K. (2017). Quantitative Social Science: An Introduction. Princeton: Princeton
University Press.

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Unit–8

DESCRIPTIVE STATISTICS

Written by: Dr. Mubeshera Tufail

Reviewed by: Dr. Farah Naz Makhdoom

133
 INTRODUCTION

Descriptive statistics serves as the bedrock upon which much of statistical analysis
is built. It provides the tools and techniques necessary to understand, summarize,
and visualize data in a meaningful and interpretable way. Descriptive statistics
allows us to explore the characteristics of a dataset providing insights into its central
tendencies, variability, and distribution. By examining key summary measures and
visual representations, we can uncover patterns, trends, and relationships within the
data, enabling us to make informed decisions and draw meaningful conclusions.
In this unit, we will explore the fundamental concepts and methods of descriptive
statistics. We will begin by learning about measures of central tendency such as the
mean, median, and mode, which provide a summary of the typical or central value
of a dataset. Building upon this foundation, we will delve into measures of
variability, including the range, variance, and standard deviation, which quantify
the spread or dispersion of data points around the central tendency. Understanding
these measures is essential for assessing the variability and reliability of data.
This unit will emphasize the importance of critical thinking and interpretation in
descriptive statistics. By developing a solid understanding of descriptive statistics, you
will be equipped with the skills and knowledge necessary to analyze and interpret data
in a wide range of contexts, from scientific research to business analytics.

LEARNING OUTCOMES
After completing the unit, you would be able to:
1. Understand the fundamental concepts of descriptive statistics, including
measures of central tendency, variability, and distribution.
2. Calculate and interpret measures of central tendency, such as the mean,
median, and mode, to summarize the typical value of a dataset.
3. Calculate and interpret the measures of variability, including the range,
variance, and standard deviation, to assess the spread or dispersion of data
points.
4. Apply descriptive statistics techniques to analyze and interpret data in various
contexts, including scientific research, business analytics, and social sciences.
5. Communicate findings effectively using descriptive statistics, presenting
summary measures and visual representations in a clear and concise manner
to stakeholders or audiences.
6. Develop a deeper appreciation for the role of descriptive statistics in
understanding and interpreting data, and recognize its importance as a
foundational skill in statistical analysis and decision-making.

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8.1 Descriptive Statistics

Descriptive statistics refers to the branch of statistics that focuses on summarizing

and describing the main features of a dataset. Its primary goal is to organize,
summarize, and present the data in a meaningful way, allowing for easier
interpretation and understanding. Descriptive statistics provide simple summaries
ofthe sample and the observations within it. Common measures and techniques in
descriptive statistics include.

1. Frequency Distributions & Graphical Representations: It involves

summarizing the number of times each value or category occurs in a dataset,
in the form of tables, histograms, or bar charts. Visualizations such as
histograms, box plots, scatter plots, and pie charts help in illustrating the
characteristics of the data.
2. Measures of Shape: These statistics describe the distributional shape of the
data and include skewness (asymmetry) and kurtosis (peakedness).
3. Measures of Central Tendency: These statistics indicate the center or
average of the data and include measures such as the mean (average), median
(middle value), and mode (most frequent value).
4. Measures of Variability: These statistics describe the spread or dispersion
of the data and include measures such as the range, variance, standard
deviation, and interquartile range.

Descriptive statistics are useful for gaining insights into the basic properties of a
dataset, identifying patterns, detecting outliers, and making initial interpretations.
They form the foundation for more advanced statistical analyses and inferential
statistics, which involve making predictions or inferences about a population based
on sample data.

8.2 Levels of Measurement

There are four types of measurement scales: nominal, ordinal, interval and ratio
scale. Each scale is characterized by the amount of preciseness carried by the scale
due to its characteristics. These scales are used to measure different types of
variables in your data. The detail of these scales is given in the table below:

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Table 8.1: Types of measurement scales and the data variables
Type of Characteristics Numerical Descriptive
Examples
Scale Description Data Statistics
Nominal Classification Counting Gender Frequency in each
but no order, (1=Male, category Percent
distance, or 2=Female) in each category
origin Mode
Ordinal Classification Rank ordering Academic status Median
and order but no (1=Freshman, Range
distance or 2=Sophomore, Percentile
unique origin 3=Junior, 4=Senior), ranking
Age group, Income
level, Employment
Status
Interval Classification, Arithmetic Temperature in Mean
order, and operations that degrees Standard
distance but no preserve order Satisfaction on deviation
unique origin and magnitude semantic differential Variance
scale
Ratio Classification, Arithmetic Age in years Income Geometric
order, distance operations on in Saudi riyals mean
and unique actual quantities Coefficient of
origin variation

8.3 Frequency and Frequency Tables

In statistics, frequency refers to the number of times a particular value or category
occurs in a dataset. It's a fundamental concept used to summarize and analyze data.
Frequencies are often presented in tables, histograms, or other graphical
representations to show the distribution of values within a dataset. For example, if
you have a dataset consisting of exam scores for a class of students, the frequency
of each score would indicate how many students achieved that particular score. This
information can help you understand the distribution of scores and identify patterns
or outliers within the data.

A basic frequency table has two columns. The first column lists all the categories
of data. The second column lists the frequency of each category, which is the
number of data values in the category. For example, a teacher made the following
list for the grades she awarded to her 25 students on an essay: A C C B C D C
C F D C C C B B A B D B A A B F C B

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This list contains all the grades, but it is not easy to read. A better way to display
these data is with a frequency table—a table showing the number of times, or
frequency, that each grade appears (as shown in the table). The five possible grades
are called the categories for the table.

Table 8.2: Frequency Table

Grade Frequency
A 4
B 7
C 9
D 3
F 2
Total

8.3.1 Cumulative and Relative Frequency

The relative frequency of any category is the fraction (or percentage) of the data
values that fall in that category:

Relative frequency = Frequency in category

total frequency

The cumulative frequency of any category is the number of data values in that
category and all preceding categories.

The relative frequency for a category expresses its frequency as a fraction or

percentage of the total. For example, (check the table given above) 4 of the 25
students received A grades, so the relative frequency for A grades is 4/25, or 16%.
The total relative frequency must always be 1, or 100% (though rounding may
sometimes cause the relative frequencies in a table or chart to add up to slightly
more or less than 100%). The cumulative frequency is the number of responses in
a particular category and all preceding categories. For example, the cumulative
frequency for grades of C and above is 20, because 20 students received grades of
either A, B, or C.

Example:
Consider the following set of 20 scores from a 100-point exam:

76 80 78 76 94 75 98 77 84 88 81 72 91 72 74 86 79 88 72 75

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 Determine appropriate bins, and make a frequency table. Include columns for
relative and cumulative frequency, and interpret the cumulative frequency for
this case.

Solution: Please check the following table for the required calculations.

Table 8.3: Relative and Cumulative Frequency of the exam scores

Cumulative
Scores Frequency Relative frequency
frequency
95-99 1 0.05 = 5% 1
90-94 2 .10 = 10% 3
85-89 3 0.15 = 15% 6
80-84 3 0.15 = 15% 9
75-79 7 0.35 = 35% 16
70-74 4 0.20 = 20% 20
Total 20 1.00 = 100% 20

8.4 Measures of Central Tendency: Mean, Median and Mode

Measures of central tendency are statistical measures that describe the central or
typical value in a dataset. They provide a single value that represents the "center"
of the data distribution. The three most common measures of central tendency are:
1) Mean: The mean, also known as the average, is calculated by summing all
the values in the dataset and then dividing by the total number of values. It is
easy to calculate, and it takes into account each and every value of a given
dataset. However, it is sensitive to extreme values (outliers) and is affected
by the distribution of the data. The formula for the mean is given below:

Mean = (Sum of all values)

(Number of values)

Example 5, 10, 12, 16, 8, 42, 25, 15, 10, 7

Solution:
5+10+12+16+8+42+25+15+10+7
= 150 /10
Mean= 15

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2) Median: The median is the middle value in a dataset when the values are
arranged in ascending or descending order. If there is an even number of
values, the median is the average of the two middle values (add the middle
values and divide it by 2). The median is less affected by extreme values and
is often used when the data is skewed or contains outliers. It does not take
into account each and every value of a given dataset, only the midpoint of the
data. It is used when the calculation of the average is not possible.

Example:
12,15, 10, 20, 18, 25, 45, 30, 26

By arranging the data in ascending order

10, 12, 15, 18, 20, 25, 26, 30, 45
So,
Median = 20

3) Mode: The mode is the value that occurs most frequently in a dataset. A
dataset can have one mode (unimodal), two modes (bimodal), or more than
two modes (multimodal). The mode is useful for categorical data like shoe
size, average yield of crops etc. It can also be used for numerical data.
However, it does not take into account each and every value of a given dataset
but only the one that is frequently occurring.

Example
12, 24, 15, 18, 30, 48, 20, 24
So,
Mode = 24

These measures provide different insights into the central tendency of the data and
are used in various contexts depending on the nature of the dataset and the purpose
of the statistical study.

8.5 Shapes of Distribution: Symmetry, Variation and Normal

Distribution

8.5.1 Skewness
Skewness is a measure of the asymmetry of the probability distribution of a real-
valued random variable about its mean. In simpler terms, it indicates whether the
data is skewed to the left or right relative to the mean.

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 Figure 8.1. Skewness

If the distribution is skewed to the left (negatively skewed), it means that the tail on
the left side of the distribution is longer or more spread out than the tail on the right
side. In other words, the majority of the data points are concentrated on the right
side of the distribution, and there are relatively few data points on the left side. If
the distribution is skewed to the right (positively skewed), it means that the tail on
the right side of the distribution is longer or more spread out than the tail on the left
side. In this case, the majority of the data points are concentrated on the left side of
the distribution, and there are relatively few data points on the right side.

Skewness is often measured using the skewness coefficient or skewness statistic. A

skewness value of 0 indicates a symmetrical distribution, while positive and
negative skewness values indicate right and left skew, respectively. The magnitude
of the skewness value indicates the degree of skewness.

8.5.2 Normal Distribution

If the data is evenly distributed, our graph will come across a curve (as shown in the
image below). In statistics, this curve is called a normal curve and in social sciences, it
is called the bell curve. A standard normal curve has a mean of 0 and a standard of 1.
The larger the standard deviation, the flatter the curve will be and vice versa.

Figure 8.2. Normal Distribution

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For a normal distribution curve of a dataset, the score of mean, median or mode are
equal. The curve is symmetric at the center (i.e. around the mean). Exactly half of
the values are to the left of the center and half to the right. The total area under the
curve is 1.

8.5.3 Kurtosis
Kurtosis is a statistical measure that describes the shape of the probability
distribution of a real-valued random variable. It measures the "tailedness" or the
degree of peakedness of a distribution relative to the normal distribution.

If a distribution has positive kurtosis (leptokurtic), it means that it has fatter tails
and a higher peak compared to the normal distribution. This indicates that the
distribution has heavier tails and more extreme values than the normal distribution.
If a distribution has negative kurtosis (platykurtic), it means that it has thinner tails
and a lower peak compared to the normal distribution. This indicates that the
distribution has lighter tails and fewer extreme values than the normal distribution.
If a distribution has a kurtosis value close to zero (mesokurtic), it means that it has
similar tail behavior and weakness to the normal distribution.

Kurtosis is typically measured using the kurtosis coefficient or kurtosis statistic.

The kurtosis of the normal distribution is 3. Therefore, excess kurtosis is often
calculated as the kurtosis coefficient minus 3. A positive excess kurtosis indicates
leptokurtosis, while a negative excess kurtosis indicates platykurtosis. Kurtosis is
important in statistics because it provides information about the shape of the
distribution and helps to identify the presence of outliers or heavy-tailed
distributions. It can also affect the performance of statistical tests and models,
particularly those that assume a normal distribution.

Figure 8.3. Kurtosis

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1.6 Measures of Variation: Range, Quartile, Standard Deviation,
Standard Scores, Percentiles
The measure of central tendency informs us about the central value of a dataset.
However, it does not tell about the spread of values in the dataset because any two
sets of data may have the same value of the central tendency but have vastly
different magnitudes of variability. Consider the following two types of datasets
having same the mean value but different variability.

10, 12, 11, 14, 13

10, 2, 18, 27, 3

In such cases, additional information regarding how the data are dispersed around
the average is required. It is called the measures of dispersion. By dispersion, we
mean the degree to which data is spread about an average value. The measures of
dispersion are given below:
i. Range
The Range is defined as the difference between the largest score (L) in the set of
data and the smallest score (S) in the set of data.
Range = L – S

Let us calculate the range of the following data:

4 8 1 6 6 2 9 3 6 9

The largest score (L) is 9; the smallest score (S) is 1; the range is:
L-S=9-1=8

It gives a rough idea of the spread of the data but is sensitive to outliers. The range
is used when you have ordinal data or you are presenting your results to people
with little or no knowledge of statistics. The range is rarely used in scientific work
as it does not a very detailed information about the dataset. It depends only on two
scores in the given dataset i.e., the highest number and lowest number. Two very
different sets of data can have the same range. For example, “1, 6, 1, 4, 9” and “1,
3, 5, 7, 9” are two datasets with the same range.

ii. Interquartile Range (IQR)

The interquartile range is the range of the middle 50% of the data and is calculated
as the difference between the third quartile (Q3) and the first quartile (Q1). It is less
142
sensitive to outliers compared to the range and provides a measure of the spread of
the central portion of the data.

IQR= Q3- Q1

Q1. It is the midpoint of the lowest 50% of data and is also known as the
lowest quartile or first quartile.

Q2. It is the median of the data or the middle point of the given data set and is
also known as the second quartile.

Q3. It is the middle point of the highest 50% of data and is also known as the
highest quartile or third quartile.

Therefore, quartiles measure the dispersion of scores above and below the
median by dividing the entire data set into 4 equal groups.

143
iii. Mean Deviation
It is the mean of the distances of each value from their mean. It helps us get a sense
of how "spread out" the values in a data set are. There are three steps involved:
i. Find the mean of the value
ii. Find the distance of each value from the mean
iii. Find the mean of those distances

Example
Find the mean deviation of the following data set
3, 6, 6, 7, 8, 11, 16, 15

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iv. Variance
Variance measures the average squared deviation of each data point from the mean
of the dataset. It provides a measure of the spread of data around the mean.
However, since it involves squaring the deviations, the variance is not in the same
units as the original data, making it less interpretable. Although, it can manually be
calculated by using a formula, MS Excel and SPSS can help to compute the
variance of a given dataset.

v. Standard deviation
Standard deviation is the square root of the variance. It measures the average
deviation of data points from the mean score and is often preferred over variance
because it is in the same units as the original data and is easier to interpret. Standard
deviation was reported with the mean score. Although, it can manually be
calculated by using a formula, MS Excel and SPSS can help to compute the
variance of a given dataset.

SUMMARY

In this unit on Descriptive Statistics, we have gained the essential knowledge and
skills in understanding and summarizing data. Descriptive statistics serves as a
foundational tool in the field of statistics providing us with the means to explore
and interpret datasets in a meaningful and informative manner. Throughout this
unit, we have delved into the fundamental concepts of descriptive statistics
including measures of central tendency, variability, and distribution. We have
learned how to calculate and interpret summary measures such as the mean,
median, and standard deviation.

By mastering these techniques, we have gained the ability to uncover patterns,

trends, and relationships within datasets, enabling us to make informed decisions
and draw meaningful conclusions. We have also developed critical thinking skills
to evaluate summary statistics. Furthermore, we have recognized the limitations of
various techniques of descriptive statistics. As we move forward, let us carry
forward the knowledge and skills gained from this unit, recognizing the importance
of descriptive statistics in various fields, including scientific research, business
analytics, and social sciences. By applying descriptive statistics techniques
effectively, we can continue to analyze and interpret data with confidence and
communicate findings to stakeholders or audiences in a clear and concise manner.

145
 EXERCISES
Multiple Choice Questions
1. Which measure of central tendency is most affected by extreme values?
a) Mean
b) Median
c) Mode
d) Range
Answer: a) Mean

2. What is the main characteristic of a normal distribution?

a) It is skewed to the right.
b) It is skewed to the left.
c) It is symmetric and bell-shaped.
d) It has multiple peaks.
Answer: c) It is symmetric and bell-shaped.

3. Which level of measurement involves categories that can be ranked?

a) Nominal
b) Ordinal
c) Interval
d) Ratio
Answer: b) Ordinal

4. The difference between the highest and lowest values in a dataset is called the:
a) Mean
b) Range
c) Quartile
d) Standard deviation
Answer: b) Range

5. Which percentile corresponds to the median?

a) 25th
b) 50th
c) 75th
d) 90th
Answer: b) 50th

6. What does a standard score (z-score) indicate?

a) The sum of all values in a dataset.
b) The number of standard deviations a value is from the mean.
c) The highest value in the dataset.
d) The central point of the dataset.
Answer: b) The number of standard deviations a value is from the mean.

146
7. In a skewed distribution, which measure of central tendency is the best
indicator of the center?
a) Mean
b) Median
c) Mode
d) Range
Answer: b) Median

8. Which measure of variation divides a dataset into four equal parts?

a) Range
b) Standard deviation
c) Quartiles
d) Percentiles
Answer: c) Quartiles

9. A distribution of the data where most values are concentrated on one side is
called:
a) Symmetric
b) Skewed
c) Normal
d) Bimodal
Answer: b) Skewed

10. What is the purpose of a frequency table?

a) To calculate the mean and median of data.
b) To display how often each value occurs in a dataset.
c) To identify the standard deviation of a dataset.
d) To compare two datasets.
Answer: b) To display how often each value occurs in a dataset

Short-Answer Questions
1. Define the term "standard deviation" and explain its importance.
2. What is the difference between a symmetric and a skewed distribution?
3. Provide an example of data that would be measured at the nominal level.
4. How do you calculate the range of a dataset?
5. Why might the median be a better measure of central tendency than the mean
in some cases?

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Subjective Questions
1. Describe the three measures of central tendency (mean, median, and mode)
with examples. Explain situations where each measure is most appropriate.
2. Explain the characteristics of a normal distribution. Why is it important in
statistics?
3. Discuss the steps involved in creating a frequency table with the help of an
example.
4. What are quartiles, and how are they used to measure variation in a dataset?
Provide an example.
5. Explain the calculation and interpretation of measures of variability,
including the range, variance, and standard deviation.
6. What are the implications of descriptive statistics techniques to analyze and
interpret data in various contexts, including scientific research, business
analytics and social sciences?
7. Reflecting on your learning journey in this unit, what are some key insights
or takeaways you've gained about descriptive statistics, and how do you plan
to apply this knowledge in the future?

REFERENCES

Aufmann, R. N., Lockwood, J.S., Nation, R. D. & Clegg, D. K. (2017). Mathematical

Thinking and Quantitative Reasoning. Boston: Houghton Mifflin Company.

Bennett, J. & Briggs, W. (2015). Using & Understanding Mathematics: A Quantitative

Reasoning Approach. Boston: Pearson.

De MesQuita, E. B. & Fowler, A. (2021). Thinking Clearly with Data: A Guide to

Quantitative Reasoning and Analysis. Princeton: Princeton University Press.

Imai, K. (2017). Quantitative Social Science: An Introduction. Princeton: Princeton

University Press.

148
Unit–9

USING TABLES
AND
GRAPHS FOR DATA

Written by: Dr. Mubeshera Tufail

Reviewed by: Dr. Farah Naz Makhdoom

149
 INTRODUCTION

In data analysis, tables and graphs serve as powerful tools for organizing,
summarizing, and visualizing data in a meaningful and interpretable way. They
provide a clear and concise representation of complex datasets, enabling us to
uncover patterns, trends, and relationships that may be hidden within the numbers.
In this unit, we explore the fundamental concepts and techniques of creating and
interpreting tables and graphs of data. We will begin by understanding the
importance of data visualization and its role in enhancing our understanding of data.
We will learn how to construct and interpret tables to organize and summarize data
in a systematic manner. Building upon this foundation, we will delve into the world
of graphical representations, exploring various types of graphs such as bar graphs,
line graphs, and histograms. We will learn how to choose the appropriate type of
graph to effectively communicate different types of data and relationships within
the dataset. We will learn techniques for designing clear and informative tables and
graphs, avoiding common pitfalls and misleading visualizations.

By the end of this unit, you will have developed a solid understanding of tables
and graphs of data equipping you with the skills and knowledge necessary to
analyze and interpret data effectively. Whether you are a student, researcher, or
professional in any field, the ability to create and interpret tables and graphs will
be invaluable for communicating findings, making informed decisions, and driving
meaningful insights from data.

LEARNING OUTCOMES

After completing the unit, you would be able to:

1. Understand the importance of data visualization and the role of tables and
graphs in organizing and summarizing data effectively.

2. Interpret tables to organize and present data in a clear and systematic manner.

3. Gain insight into the principles of graphical design, including clarity,

accuracy, and honesty, to ensure that visual representations accurately convey
the underlying data.

4. Understand the techniques for choosing the appropriate type of graph based
on the characteristics of the data and the message to be communicated.

150
5. Develop critical thinking skills to evaluate the effectiveness of tables and
graphs in conveying information and identifying potential biases or
misleading visualizations.

6. Explore advanced techniques for enhancing the visual appeal and clarity of
tables and graphs, such as labeling, scaling, and incorporating color and visual
elements.

7. Apply tables and graphs effectively to analyze and interpret data, identify
patterns and trends, and communicate findings to stakeholders or audiences
in a clear and concise manner.

8. Develop a deeper appreciation for the power and versatility of tables and
graphs as tools for data analysis and communication, and recognize their
importance as essential skills for success in the modern data-driven world.

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9.1 Tables and Graphs for Data
The source of the statistical knowledge lies in the data. Once we obtain the data
values from the sample in a study, one way to become acquainted with them is to
display them in tables or graphically. Tables, Charts and graphs are very important
tools in statistics because they communicate information visually. These visual
displays may reveal the patterns of behavior of the variables being studied. The
most common graphical displays are the frequency table, pie chart, bar graph,
Pareto chart, and histogram.

9.2 Tables
Tables play a fundamental role in statistics and data presentation by providing a
concise and organized way to present information. One of the key advantages of
using tables is their ability to summarize large datasets into a compact format,
making it easier for researchers, analysts, and decision-makers to interpret the data.
Tables allow for the systematic arrangement of data into rows and columns,
enabling comparisons, trend identification, and pattern recognition. Whether it's
presenting demographic information, experimental results, or financial data, tables
offer a clear and structured way to convey complex information effectively.

Tables provide a visual representation of numerical data, enhancing understanding

and facilitating analysis. By organizing data into rows and columns, tables allow
for straightforward comparisons of different variables or categories. This
comparative analysis is essential for identifying relationships, trends, and patterns
within the dataset. Additionally, tables can accommodate a variety of statistical
measures such as means, standard deviations, percentages, and correlations,
providing valuable insights into the distribution and characteristics of the data. This
structured format enables researchers to draw conclusions, make informed
decisions, and communicate findings with clarity.

Tables offer flexibility in data presentation, allowing users to customize the layout
and format according to their specific needs and preferences. Whether it's adjusting
column widths, adding descriptive titles, or highlighting important data points,
tables can be tailored to enhance readability and emphasize key findings. With the
advent of digital technology, interactive tables enable users to sort, filter, and
manipulate data dynamically, empowering them to explore the dataset in-depth and
extract relevant information efficiently. Overall, tables serve as a versatile tool in
statistics and data presentation, facilitating comprehension, analysis, and
communication of complex datasets across various fields and disciplines. Look at
the table given below with a table caption at the top, containing four examples of
tables summarizing a large amount of information in a concise space.

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Table 9.1: Examples of Tables for Data Presentation
Example 1

Example 2

Example 3

153
Example 4

Important Labels for Graphs

Title/caption: The graph should have a title or caption (or both) that explains
what is being shown and, if applicable, lists the source of the data.

Vertical scale and title: Numbers along the vertical axis should clearly indicate
the scale. The numbers should line up with the tick marks—the marks along the
axis that precisely locate the numerical values. Include a label that describes the
variable shown on the vertical axis. Horizontal scale and title: The categories
should be clearly indicated along the horizontal axis; tick marks are not necessary
for qualitative data but should be used with quantitative data. Include a label that
describes the variable that the categories represent.

Legend: If multiple data sets are displayed on a single graph, include a legend
or key to identify the individual data sets.

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9.3 Bar Graph
A graph of bars whose heights represent the frequencies (or relative frequencies) of
respective categories is called a bar graph.

Figure 9.1. Bar Chart for Essay Grades

9.4 Pie Chart

Pie charts are used primarily for relative frequencies, because the total pie must
always represent the total relative frequency of 100%. Figure 9.2 shows a pie chart
for the essay grade data. The size of each wedge is proportional to the relative
frequency of the category it represents.

Figure 9.2. Pie Chart for Letter Grades

155
9.5 Histograms and Line Chart
A histogram is a bar graph for quantitative data categories. The bars have a natural
order, and the bar widths have a specific meaning. A line chart shows the data value
for each category as a dot, and the dots are connected with lines. For each dot, the
horizontal position is the center of the bin it represents and the vertical position is
the data value for the bin.

A time-series graph is a line chart or histogram in which the horizontal axis

represents time.

Figure 9.3. Histogram Figure 9.4. Line chart

Figure 9.5. Example of Time-series graph

156
9.6 Multiple Bar Graphs and Line Charts

A multiple bar graph is a simple extension of a regular bar graph. It has two or more
sets of bars that allow comparison of two or more data sets. All the data sets must
have the same categories so they can be displayed on the same graph. The example
given below is a multiple bar graph with two sets of bars, one for men and one for
women.

The data categories (levels of educational attainment by gender) are qualitative, which
makes a bar chart the best choice for display. In cases in which data categories are
quantitative, a multiple line chart is often a better choice. The example given below
shows time-series data using four different lines for four different data sets, each based
on a different level of educational attainment. The data are quantitative in this case
because the categories (on the horizontal axis) are years and the data values are
unemployment rates, both of which are measured quantitatively.

Example of Multiple Bar Chart

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 Example of Multiple Line Chart

Example of Multiple Bar chart

9.7 Scatter Plot

A scatter plot (aka scatter chart, scatter graph) uses dots to represent values for two
different numeric variables. The position of each dot on the horizontal and vertical
axis indicates values for an individual data point. Scatter plots are used to observe
relationships between variables.

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There are three simple steps to plot a scatter plot.
Step–1: Identify the x-axis and y-axis for the scatter plot.
Step–2: Define the scale for each of the axes.
Step–3: Plot the points based on their values.

Table 9.2: Examples of Scatter Plots

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9.8 Stack Plots
Another way to show two or more related data sets simultaneously is with a stack
plot, which shows different data sets stacked upon one another. Data can be stacked
in both bar charts and line charts. Figure 5.14 shows a stack plot using stacked bars
laid out horizontally. Each bar is divided into sections, which are color-coded
according to the legend at the top. For example, the top bar shows that the total
budget for the average commuter student at a two-year public college is $15,584
and the light blue segment in that bar shows that this average student spends $7419
on room and board. Stack plots can also be made with stacked lines, which are
particularly useful for showing trends over time.

Figure 9.6. Example of Stack Plot

9.9 Graph for Geographical data

We are often interested in geographical patterns in data. The figure given below
shows one common way of displaying geographical data. In this case, the map
shows trends in energy use per capita (per person) in different states. The display
in the Figure given below works well because each state is associated with a unique
energy usage per person. For data that vary continuously across geographical areas,
a contour map is more convenient.

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 Figure 9.7. Example of Graph for Geographical Data

9.10 Three-Dimensional Graph

Nowadays, computer software makes it easy to give almost any graph a three-
dimensional appearance. Its three-dimensional effects are purely cosmetic. It
carries distinct information along its three axes, making it a true three-dimensional
graph. The advantage of three-dimensional graphics is that they allow us to show
richer data sets. The drawback is that it can be difficult to read the data precisely.
Three-dimensional graphics therefore tend to work best when they are interactive
(online), so that figures can be rotated or viewed from different perspectives.

Figure 9.8. Example of 3-Dimensional Graph

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9.11 Infographics
All of the graphic types, we studied so far, are common and fairly easy to create.
However, the availability of sophisticated software has made more complex
graphics increasingly common. These graphics come in many types, with one of
the most general types being what has come to be called “information graphics,” or
infographics for short. The goal of an infographic is to present a large, interrelated
set of information in a visual way that can be interpreted clearly and easily.

The figure given below shows an infographic summarizing the characteristics of

first-year college students. Notice that it contains a combination of numerical data
values (such as the percentages in the top row), two bar graphs (in the second and
third rows), a line chart (in the bottom row), and words and icons designed to help
explain what is going on. It is certainly a case of a picture being worth far more
than a thousand words. Many online infographics go even further, adding
interactive or animated features that add to their wealth of information.

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9.12 Pictographs
Pictographs are graphs embellished with additional artwork. The artwork may
make the graph more appealing, but it can also distract or mislead. The figure given
below is a pictograph showing the rise in world population from 1804 to 2040
(numbers for future years are based on United Nations intermediate-case
projections). The lengths of the bars correspond correctly to the world population
for the different years listed. However, the artistic embellishments of this graph are
deceptive in several ways. For example, your eye may be drawn to the figures of
people lining the globe. Because this line of people rises from the left side of the
pictograph to the center and then falls, it might give the impression that future world
population will be declining. In fact, the line of people is purely decorative and
carries no information. The more serious problem with this pictograph is that it
makes it appear that the world population has been rising linearly. However, notice
that the time intervals on the horizontal axis are not the same in each case. For
example, the interval between the bars for 1 billion and 2 billion people is 123 years
(from 1804 to 1927), but the interval between the bars for 5 billion and 6 billion
people is only 12 years (from 1987 to 1999). Pictographs are very common, but as
this example shows, you have to study them carefully to extract the essential
information and not be distracted by the cosmetic effects.

Figure 9.9. Example of a Pictograph

9.13 Guidelines for Graphics

Take care of the following points while looking at and interpreting the graphs.
1. Many graphics are drawn in a way that distorts our perception of them.
2. Take care of the scale and the distribution.
3. Notice the values given at the vertical and horizontal axis.
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 SUMMARY

Tables and graphs serve as powerful tools for conveying complex information in a
clear and concise manner, enabling us to uncover patterns, trends, and relationships
within datasets. Throughout this unit, we have explored various types of graphs,
including bar graphs, line graphs and histograms to visually represent different
types of data and relationships. Moreover, we have gained insight into the
principles of graphical design, emphasizing clarity, accuracy, and honesty in data
representation. By applying these principles, we can create visualizations that
accurately convey the underlying data and enhance our understanding of the
information presented. Furthermore, we have recognized the importance of critical
thinking in evaluating the effectiveness of tables and graphs in conveying
information. By developing the ability to assess visualizations for biases or
misleading representations, we can ensure that our analyses are based on reliable
and trustworthy data. Whether in academic research, business analytics, or public
policy, the ability to create and interpret tables and graphs will be invaluable for
making informed decisions and driving meaningful insights from data.

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 EXERCISES

1. Which type of graph is best suited for showing the proportion of categories in
a dataset?
a) Bar graph
b) Pie chart
c) Line chart
d) Histogram
Answer: b) Pie chart

2. A histogram differs from a bar graph because:

a) Histograms use percentages instead of counts.
b) Histograms represent continuous data, and bar graphs represent categorical
data.
c) Histograms use vertical bars, while bar graphs use horizontal bars.
d) Bar graphs do not show any data distribution.
Answer: b) Histograms represent continuous data, and bar graphs represent
categorical data.

3. What does a scatter plot display?

a) Relationships between two variables.
b) Trends over time.
c) Proportions of a whole.
d) Comparisons between categories.
Answer: a) Relationships between two variables.

4. What is the primary purpose of a line chart?

a) To display frequency distribution.
b) To represent parts of a whole.
c) To show trends over time.
d) To compare multiple datasets.
Answer: c) To show trends over time.

5. Which type of chart is commonly used to display geographical data?

a) Pie chart
b) Line chart
c) Map-based graph
d) Stack plot
Answer: c) Map-based graph

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6. What does a stack plot visually represent?
a) Changes in individual variables over time.
b) Accumulation of data across categories over time.
c) Frequency distribution.
d) Correlation between variables.
Answer: b) Accumulation of data across categories over time

7. What is the main advantage of using a pictograph?

a) It displays data in a three-dimensional format.
b) It uses symbols to represent quantities, making data visually appealing
and easy to interpret.
c) It shows trends over time.
d) It is suitable for precise numerical analysis.
Answer: b) It uses symbols to represent quantities, making data visually
appealing and easy to interpret.

8. Which of the following graphs is best for visualizing relationships between

three variables?
a) Pie chart
b) Three-dimensional graph
c) Scatter plot
d) Line chart
Answer: b) Three-dimensional graph

9. In an infographic, the key purpose is to:

a) Represent data visually using minimal text.
b) Display data using only pie charts.
c) Analyze trends over time.
d) Perform detailed numerical calculations.
Answer: a) Represent data visually using minimal text

10. Which guideline is most important when designing graphics for data?
a) Use as many colors as possible.
b) Ensure simplicity and clarity to avoid confusion.
c) Avoid labels and legends.
d) Use only one type of graph per presentation.
Answer: b) Ensure simplicity and clarity to avoid confusion.

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Short-Answer Questions
1. Define a bar graph and give an example of when to use it.
2. What is the difference between a pie chart and a stack plot?
3. Explain the importance of guidelines in designing effective graphics.
4. What is a scatter plot, and how does it show relationships between variables?
5. Why are infographics increasingly popular for presenting data?

Subjective Questions
1. Explain the importance of data visualization and the role of tables and graphs
in summarizing and presenting data effectively.

2. What are the various ways of organizing the data in a systematic manner and
presenting it clearly and concisely?

3. What are the advantages of creating various types of graphs such as bar
graphs, line graphs, and histograms, to visually represent different types of
data and relationships within the dataset?

4. What are the principles of graphical design, including clarity, accuracy, and
honesty? How it can be applied to create visualizations that accurately convey
the underlying data?

5. Describe the procedure of choosing the appropriate type of graph based on

the characteristics of the data and the message to be communicated.

6. Reflecting on your learning journey in this unit, what are some key insights
or takeaways you have gained about tables and graphs of data, and how do
you plan to apply this knowledge in the future?

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 REFERENCES

Aufmann, R. N., Lockwood, J.S., Nation, R. D. & Clegg, D. K. (2017). Mathematical

Thinking and Quantitative Reasoning. Boston: Houghton Mifflin Company.

Bennett, J. & Briggs, W. (2015). Using & Understanding Mathematics: A Quantitative

Reasoning Approach. Boston: Pearson.

De MesQuita, E. B. & Fowler, A. (2021). Thinking Clearly with Data: A Guide to

Quantitative Reasoning and Analysis. Princeton: Princeton University Press.

Imai, K. (2017). Quantitative Social Science: An Introduction. Princeton: Princeton

University Press.

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