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Measures of Dispersion — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsMeasures of Dispersion6 Marks
Question
Discuss merits, demerits and uses of range.
✓

Answer

MERITS OF RANGE:
  1. It is easiest to calculate and simplest to understand even for a beginner.
  2. It is one of those measures which are rigidity defined.
  3. It gives us the total picture of the problem even with a single glance.
  4. It is used to check the quality of a product for quality control. Range plays an important role in preparing R-charts, thus quality is maintained.
  5. The idea about the price of Gold and Shares is also made taking care of the range in which prices have moved for the past some periods.
  6. Meteorological Department also makes forecasts about the weather by keeping range of temp.
DEMERITS OF RANGE:
  1. Range is not based on all the terms. Only extreme items reflect its size. Hence range cannot be completely representative of the data as all other middle values are ignored.
  2. Due to above reason range is not a reliable measure of dispersion.
  3. Range does not change even the least even if all other, in between, terms and variables are changed.
  4. Range is too much affected by fluctuation of sampling. Range changes from sample to sample. As the size of sample increases range increases and vice versa.
  5. It does not tell us anything about the variability of other data.
  6. For open-end intervals, range is indeterminate because lower and appear limits of first and last interval are not given.
USES OF RANGE:
  1. Quality Control: In quality control of manufactured products, range is used to study the variation in the quality of the units manufactured. Even with the most modern mechanical equipment there may be a small, almost insignificant, difference in the different units of a commodity manufactured. Thus, if a company is manufacturing bottles of a particular type, there may be a slight variation in the size or shape of the bottles manufactured. In such cases a range is usually determined, and all the units which fall within these limits are accepted while those which fall outside the limits are rejected.
  2. Variation in Money Rates, Share values, Exchange Rates and Gold prices, etc: Variations in money rates, share values, gold prices and exchange rates are commonly studied through range because the fluctuations in them are not very large. In fact range as a measure or of dispersion should be generally used only when variations in the value of the variable are not much.
  3. Weather forecasting: Range gives an idea of the variation between maximum and minimum levels of temperature. From day to day the range would not vary much and it is helpful in studying the vagaries of nature if variations suddenly rise or fall.

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