Category: Commerce Notes PPT

Introduction

Personal selling is also known as the act of convincing a customer to buy a given product or device. It is also considered to be one of the most costly and effective promotional methods that are ever seen. It is effective as there is a face-to-face interaction observed between the seller and the buyer which helps the seller to change their promotional techniques used as the situation asks for. If you have been wanting to know more about Personal Selling – Concept, Importance, Advantages, and Limitations then now you can check out this article through to get a detailed view on personal selling and the concepts that are involved.

Personal Selling is yet another type of selling initiative by the business companies, a way to persuade the local people to try their products. Personal Selling is surely one of the distinctive methods which are used by the selling strategists to achieve their goal of selling a destined quantity of sales. 

In our discussion, we have included this interesting topic of ‘Personal Selling’, and to further strengthen our knowledge we have discussed the pros and cons related to this.

  

Concept of Personal Selling

Personal selling is face-to-face selling where one person who is the salesman tries to convince the customer to buy a product assigned by the company. It is a promotional activity by which the salesperson uses his or her skills and abilities to persuade people to buy the product thereby in an attempt to make a sale.

Here, the salesperson tries to highlight the features of the product to convince the customer that the product will hold benefits in the long term. However, getting a customer to buy a product is not always the motive behind personal selling, this personal selling is also done to make the customers aware of new products in the market. 

Personal Selling Examples

Personal selling is where businesses use the sales force to sell the product after meeting the customer face-to-face.

The sellers advertise these products through their skills such as attitude, appearance, and specialist product knowledge. The salesperson informs and encourages the customer to buy or at least try the product.

A unique example of personal selling is found in the department stores on the perfume and cosmetic counters. A customer can get advice on how to apply the product, its specialties and can try different related products, these all are guided by the personal selling staff present there. Products with high prices, and with complex features, are often sold using this type of technique. Examples: Cars and many products that are sold by businesses to other industrial customers.

Importance of Personal Selling 

The following points explain the importance of personal selling:

1. Two-Way Communication:

This is the best tool for personal selling. Salesmen can provide necessary information to customers about the company’s offer, and also can collect feedback from customers. He can ask if there are any queries about the product to the salesman present for personal selling. 

2. Personal Attention:

Advertising and publicity are among mass communication tools, and thus personal selling is concentrated and is focused on one individual, this will result in ineffective results. 

3. Detail Demonstration:

Television demonstrations are limited; thus, salesmen can provide a detailed demonstration and can supervise the customer through personal selling.

4. Complementary to other Promotional Tools:

Personal selling supports advertising, sales promotion, and publicity. Personal Selling even removes the drawbacks of advertising and its sales promotion. 

5. Immediate Feedback:

This is the only market promotion technique that provides immediate feedback from the customers. 

Advantages of Personal Selling 

The Advantages of Personal Selling are as follows – 

• This is a two-way communication where the selling agent gets instant feedback from the prospective buyer about their intention to buy. 

• This is an interactive form of selling, which helps in building trust with the customer. While selling high-value products like cars, the customer must trust the product and thus personal selling is needed. 

• Personal Selling is a persuasive form of selling as in this type of sale the customers come face to face with the salesperson where it is not easy to dismiss them, there is an effort of the customer to listen to them.

• Direct selling helps in reaching the audience. 

Limitations of Personal Selling 

• It is an expensive method of selling that requires high capital costs.

• Also, this method involves many labours as it is a labour-intensive method as a large sales force is needed to carry out personal selling successfully.

• The training of the salesperson for personal selling is also a very time-consuming and costly process.

• The method can only reach a limited number of people, it does not provide mass advertisements like TV or Radio ads.

Consumer preference is a significant part of microeconomics. Customer preferences include the concepts of the budget line, utility, indifference map, and indifference curve which are very closely associated with customer satisfaction. In this article, we will have a precise discussion of the various concepts of the consumer preference theory. Common yet important terminologies will also be included in this. The article will further include an analysis of the consumer behavioural patterns and a study on customer taste and preference.

Consumer Preferences Economics

Understanding the behavioural patterns of consumers means understanding the factors guiding the consumer preference in marketing. The central idea goes around with the concept of utility which is defined by the serving range of a commodity in fulfilling the human needs. It refers to the satisfaction derived by a consumer from the using of a particular product or service.

There are two types of utility:

• Cardinal Utility Approach: This is also called Marginal Utility Analysis. This theory defines utility as something measurable in numerical terms. The Cardinal Utility Theory states that utility has to be measured in the unit called ‘utils’. Goods providing higher satisfaction to the customers will get assigned with higher utils than the ones that provide less amount of satisfaction to the customers.

• Ordinal Utility Approach: This is also called Indifference Curve Analysis. This theory states that utility derived from the consumption of a commodity cannot be measured in numerical terms. Various utility levels are described with the help of ‘ranks’ in this case. Goods providing higher satisfaction to the customers will get assigned with higher ranks than the ones that provide less amount of satisfaction to the customers.

Important Terminologies Associated with Consumer Preference Theory

• Marginal Utility: The additional satisfaction derived from the consumption of an additional unit of a good or service is called marginal utility. It is defined as the change brought in the total utility by the consumption of one more unit of a particular commodity.

• Total Utility: The total amount of psychological satisfaction derived from the consumption of a said amount of a particular commodity is called total utility. Hence, total utility is the total of all the marginal utilities derived from the consumption of every successive unit of a particular commodity.

Law of Diminishing Marginal Utility

Understanding consumer preference meaning has a deeper relationship with the understanding of the Law of Diminishing Marginal Utility. It says that with more and more consumption of a particular commodity, the satisfaction of the consumers gets less and less. With the consumption of successive units of a particular commodity, its marginal utility keeps decreasing. This means that the commodity’s total utility increases but at a decreasing rate.

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Indifference Curve 

Bundles of a product making a customer more satisfies are preferred more than other bundles. However, in cases when some bundles provide equal satisfaction to a customer, indifference grows within the customer for the bundles. This makes the consumer fail in preferring one commodity over another. The indifference curve is a graphical diagram representing the bundles that tend to cause indifference in a customer. It is to be remembered that an indifference curve is in all case sloping downwards and is convex to its origin. The higher satisfaction level is denoted by a higher indifference curve.

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Did You Know?

• Indifference map is a collection of several indifference curves.

• Two indifference curves can never intersect each other.

• Both ‘Marginal Utility’, as well as ‘Total Utility,’ are measured in utils.

• For utility measurement, the Cardinal Utility Theory is a quantitative method while the Ordinal Utility Theory is a qualitative method.

Verification in Auditing

Auditing is a systematic examination or verification of assets and liabilities involved in the accounting process. It is usually performed by an auditor to make sure every department records documented transactions and specifically free from any fraudulent activity. Auditing can be done internally and externally. Intra department auditing is more frequently done within the department by either the chief of the particular department or any trustworthy employee. 

In the case of external auditing, an outsider is preferred to cross-check the account books modestly. Importantly, an auditor has to be remarkably sterile in his job without rendering any kind of partiality towards an organization. Verification of assets and liabilities doesn’t only mean reviewing account books but also internal systems or control of an organization.

 

Who Should Initiate Auditing?

However, in India, anyone who is professionally a chartered accountant from The Institute of Chartered Accountants of India (ICAI) can do the auditing independently in any firm. Vouching is reckoned to be the backbone of auditing since it aids in detecting frauds or fallacies to provide enhanced results in balance sheets or income statements. Therefore, this proves the importance of vouching in auditing

Basic Principles in Auditing

There are 7 basic principles which the auditors prominently adhere for a better and profound audition:

1. Morality, Objectivity, and Independence.

It is the responsibility of the auditor, to be honest, and sincere while he is auditing and importantly he is not allowed to favour the organization. He must not indulge himself in any kind of malpractices and must remain unbiased throughout the whole process of auditing. The next major principle is independence. So the auditor is independent and unbiased the whole process of auditing.

2. Confidentiality or Non-disclosure.

The auditor gets full access to the organization’s sensitive financial information. So he needs to respect it.

He cannot let any other party get access to this information unless the law allows it. The organization trusts him entirely so he has to be more careful with their certificates and documents.

3. Capabilities and Skill

The auditor must be qualified in the field of auditing and he must be updating himself about the new announcements and changes. If required he can take training and workshops to know the procedures in a better way.

4. Work Performed By Others

The auditor has many employees who work under him. But then the auditor will be fully responsible even if his workers had worked for him. And so he must be accurate in his work and review it properly.

5. Documentation

The auditor needs to maintain a record of his auditing files concerning his auditing work as it may serve as evidence that the auditor has done his work. And also the clients can check on his work.

6. Assurance and Controls

The auditor must be sure that the financial status of the company is fair and true. He also must ensure all the material information has been recorded properly in the respective accounts.

7. Audit Evidence

To support his final opinion, the auditor himself must collect the required evidence. This collection is made from compliance and substantive procedures

And there are two sources of this evidence, they are internal and external. The external evidence is always more dependable.

Verification in Auditing

Verification in auditing is a mandatory process, which involves active verification of assets and liabilities. For instance, it may demand weighing, identification, and counting of assets. Verification of assets and liabilities verifies the following conditions:

• Precise recording

• Validity

• Legal ownership and possession

• Freedom from hindrance or encumbrance

• Valuation of the asset. 

 

Solved Example

Q. Explain the physical verification process involved in Auditing.

Answer: Certain things has to be physically verified to preserve the same which many include

This process is legislated by law in certain countries. Verification in auditing can be done either on-site or off-site. On-site verification requires the physical presence of the auditor. In off-site verification, the auditor may not be physically present but the investigation or enquiring ought to take place in any online mode.

Did You Know?

Walter Diemer was an accountant who invented chewing gum in the year 1928. Before manufacturing the successful athletic shoe, Nike co-founder, Phil Knight conferred suggestions with his accountant. History ascertains that double-entry bookkeeping was invented in the 13th century. Likewise, internal auditors were auditing their own company even before the 15th century. As soon as commerce and industry evolved, control measures and audits came into action.

Because resources, including raw materials, are scarce and limited in nature, producers are often faced with the question of, “What to produce?” and “How much to produce?”  Typically, such a problem is solved by allocating available resources in a way that helps to meet consumers’ demand effectively and in turn, generate substantial profits. However, the key to achieving it depends on producers’ ability to use an ideal combination of resources and figure out ways to lower wastage on all production aspects.

 

During their planning stage, several producers and manufacturers rely on well-crafted diagrams and charts to analyze and in turn, solve the problem of choice and resource allocation. Notably, the production possibility curve is one such medium that offers a fair idea about the feasible production goals and then proceeds to offer an insight into the favourable combination of resources. 

 

With that piece of information, are you all set to delve into detail about the production possibility curve in economics? 

 

As per the production possibilities curve definition, it is a graphical representation of all possible combinations of any two specific goods which can be produced in an economy.  Further, the analytical tool explains and addresses the problem of choice that allows producers to solve them effectively.  Additionally, it helps producers keep track of the rate of transformation of a specific product into another in a situation wherein the economy shifts from one position to another. 

 

In such a graphic tool, the maximum manufacturing capacity of a particular commodity is arranged on the X-axis, and that of other commodities is arranged on the Y-axis. The curve obtained tends to represent the number of products that a manufacturer can create with the limited resources and technology available at hand. 

 

To further understand this concept, one needs to take a look at a production possibilities curve example. However, before finding that out, one needs to become familiar with assumptions of the PPC curve. 

 

Check Your Progress: Before moving onto the next level, try to define the production possibility curve in your own words and provide suitable examples. 

What are the Assumptions of the Production Possibility Curve?

Let’s glance through the assumptions on which the production productivity curve rests –

1. Only two specific goods, namely, ‘X’ (consumer goods) and ‘Y’ (capital goods), are widely produced in an economy in different proportions.

2. The same combination of resources can be used for producing either one or both of the goods and can be freely shifted between them. 

3. The supply of resources is fixed but can be reallocated to produce both goods but within feasible limits.

4. All resources and available technology in the economy is optimally allocated and used.

5. The time duration is short.

That being said, let’s check out a hypothetical production possibility schedule and analyze it in the graphical format.

Production Possibility Schedule

Notably, the production possibility schedule is based on the Production possibility curve assumptions mentioned above.

 

Here, both P and P1 are the production possibilities of an economy that can produce either 250 kg of butter (X) or 250 kg of sugar (Y) as shown against possibilities P and P1. Nonetheless, as per assumptions, the economy must produce both commodities, thus giving rise to production possibilities like B, C and D accordingly.

 

As per the schedule, in the case of B – an economy can produce 100 kg of butter and 230 kg of sugar. On the other hand, in the case of C – it produces 150 kg of butter and 200 kg of sugar. Lastly, in the case of D – it can produce 200 kg of butter and 150 kg of sugar.

 

The general observation prevailing here is, as an economy produces more butter, it automatically produces less sugar. To elaborate, an economy reduces a portion of resources from the production of butter to produce more sugar.

 

Now let’s proceed to look at the graphical representation of the same example in the format of the production possibility curve.

 

In this PPC, butter (X) is measured horizontally, i.e. along the X-axis and sugar (Y) is measured horizontally along the Y-axis. The concave curve PP1 highlights various combinations of these two commodities P, B, C, D and P1.

 

Each transformation curve or production possibility curve serves as the locus of production combinations which can be achieved through allocated quantities of resources.  One can notice the rate of transformation on this curve as they move from point B to point C and then ultimately to point D. Also, there is a noticeable increase in the said rate of transformation. Since the curve shows that combinations B, C and D can be achieved with the available resources, they are labelled as technologically efficient combinations. 

 

Further, the production possibility curve ‘R’ lying on this curve indicates that the economy is not using its available resources efficiently. Similarly, the possibility of ‘K’ lying outside this PPC curve indicates that the economy does not have enough resources to produce the said combination. Both such combinations can be labelled as technologically unobtainable. 

 

DIY: Try to solve a project of your choice on the Production Possibility Curve from your textbook and find out if you can solve it without any help!

 

Now that we have gained substantial ideas about the production possibility curve, we should move on to finding its application in real life.

Application of Production Possibility Curve

• It helps to detect the unemployed resources in an economy.

• Explains the overall increase in production of both X and Y through technological progress.

• It comes in handy to understand the growth of an economy.

• Helps to understand the allocation of proper resources to increase production.

• Helps to understand economic efficiency in terms of production better.

• Offers an overview as to how to economize resources for production successfully. 

 

Do you want to learn more about applications of PPC in practical setup and access a detailed explanation of their graphical representation? Refer to ’s compact production possibility notes and strengthen your understanding of the fundamentals and other vital concepts effectively. Don’t wait around, download the app on your device now to jumpstart a fun and innovative way of learning.

About Production Possibility Curve

Production Possibility Curves (abbreviated PPC) is a technique for visualizing the trade-off between the marginal revenue (or benefit) of a project and its variable costs, where the project is represented by an arbitrary profit-maximizing project that can be built by varying the marginal cost of the project.  

 

The curve represents the potential profitability of the project by showing a series of points corresponding to the optimal amount of capital that can be used to maximize the project’s profitability.

 

The name “production possibility curve” derives from the shape of a “production possibility frontier”, i.e., the maximum possible combination of production levels and fixed costs. The term “production possibility frontier” itself was introduced by David Gordon in 1965 in the context of supply and demand theory.

History

Production Possibility Curves can be traced back to the work of British economist Arthur Pigou (1877-1947), who developed an economic model in his book Wealth and Welfare in the 1930s.  The “curve” was popularized by the work of Gordon in the 1960s, in his PhD dissertation and his 1965 textbook.

Overview

A Production Possibility Curve (abbreviated PPC) is a tool used to show the trade-off between the marginal revenue and marginal cost for a given project, or more generally any production function.  A production possibility curve can be constructed by plotting the ratio of the marginal revenue of a project (defined as marginal benefit minus marginal cost) against the marginal cost (cost plus opportunity cost, equal to marginal cost in competitive markets).  

 

Each point on the curve represents the optimal amount of capital that can be used to maximize the profitability of the project.  The marginal cost of the project is the cost of constructing the next unit of the project and is determined by the variable costs of building the project.  In order for the PPC to be symmetric about the y-axis, a project’s marginal cost should equal its marginal benefit.  The PPC is usually based on the assumption that the firm is operating in a competitive market. 

 

A PPC can be constructed using either net profit or net income as the independent variable, as long as this variable is a function of the project’s marginal cost and marginal benefit.  Both methods are discussed below. 

 

The PPC can also be constructed using production output as the independent variable, but for most production functions the output is a function of the project’s output (see example). 

 

When the project is of the first type, the point of the PPC on the y-axis has the maximum capacity utilization.  This is the level at which the firm is operating.  As the marginal benefit goes down, the marginal cost will also go down.  As the marginal cost goes up, the marginal benefit will also go up.  Thus, there is always an optimal level of capacity utilization. 

 

The Production Possibility Curve (PPC) is a visual tool that helps managers, marketers and other decision makers understand the maximum output, cost and lead time (time to start production) from a given input or source.

 

The first Production Possibility Curve developed in 1980 by David W. Hounshell at the University of Virginia can be viewed on his website.  The PPC graph is similar to a Cost-Willingness Curve, which shows how much a firm is willing to pay or cost to obtain an additional unit of output (e.g., a more efficient product or process).  It differs from a cost-willingness curve because it is designed for use by a decision maker who faces a limited budget and has some output capacity to use.

Development of PPC

The PPC was developed by David W. Hounshell as a way of illustrating an optimization problem.  Such problems are common in engineering and production and can be represented by an “input space”, which defines a set of different inputs that may be made available to an economic system.  

 

The output is a set of choices (i.e., output alternatives) that are optimal from an economic point of view, whereas an economic system seeks to maximize production, profit, or other goals.

 

A production possibility set (or feasible set) of outputs is defined by a certain output set and a certain lead time.  The set of feasible lead times defines the range of choices to the production process (i.e., the input space).  The feasible set of outputs is defined by a certain output set and certain minimum input requirements.

 

The output set of alternatives is defined by certain costs (for example a quantity of output) and a certain lead time for the production of each alternative.  A production possibility curve (PPC) represents the set of feasible outputs when the production process starts at time zero and reaches the minimum lead time chosen for the process.  

 

It also represents the cost of each feasible alternative.  The curves are also used in economic modelling to describe the trade-off between various alternative uses of output.

 

A production possibility curve, therefore, is simply a curve representing the possible outputs (i.e., feasible outputs) of a process.  The cost is represented by the slope of the curve.  If the curve has a positive slope, then the curve represents a production possibility set, the curve has a negative slope represents a production restriction set, and the curve with a zero slope represents an impossible set of outputs.

 

In the scope of accounting, accounts of primary entry and accounts of secondary entry are the two types of accounts. Among the books of primary entry, we have some specialized books, and we name these as subsidiary books. Among these subsidiary books, a very important kind is the purchase journal or the purchase day book. There are several types of purchase day books namely purchase journal, purchase day book, the book of the invoice, bought book, etc. It is an original entry book. This article will look into the definition, the format of purchase day book, advantages of purchase day book, solved examples, etc. 

 

Meaning of Purchase Day Book 

The purchase day book is a subsidiary book that records those credit purchases of a firm, which the firm shall resell. Therefore, no cash transactions are a part of a purchase journal. Such trades are a part of the cash book. Any transaction which the business doesn’t mean to resell is not made a part of the purchase book. 

 

For instance, a piece of machinery purchased on credit will not find a place in the purchase book but rather in a journal. When the accountant records all the entries properly, he/she calculates the total at the end of a week or month. This value shows the total amount of credit transactions for that specific period. This amount of money gets debited from the purchase account of the firm, and the credit goes to the accounts of the sellers individually.  

 

Format of Purchase Day Book

The format of the purchase day book is as follows: 

 

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As you can see, the format of the purchase book consists of five columns and is a tad bit different from an ordinary journal. The foremost column is the one concerning the date of purchase. The next column is the one for the particulars of the purchase, which in this case is the name of the supplier. One can also put in other details like the number of goods bought or the price of the goods, etc. The third column reads L.F., which refers to ‘ledger folio’ and the consecutive one is for the invoice number. These details are solely for reference information, as in the method of manual accounting, cross-referencing is an important element. The last column states the total amount that is due to the supplier for a particular transaction. 

 

Advantages of Purchase Day Book 

The following are a list of advantages of purchase daybook:

• All the transactions concerning the goods bought on credit find a single place for the purpose of referencing, thus simplifying the process.

• Important information regarding purchases doesn’t get lost and are together in one place.

• We don’t need a separate narration or account titles for a purchase day book entry.

• It facilitates the division of labour among the workers of the organization.

Now that the definition, format and importance of a purchase day book are clear, let us see a solved question on purchase day book followed by some frequently asked questions. 

 

Solved Examples 

1. PQR Ltd. runs a grocery store. The following is their list of purchases for November 2020. Draft a purchase daybook for these transactions. 

• 20Kg potatoes bought from XYZ farms at Rs. 40 per kilo and a 5% trade discount 

• 50Kg flour bought from EFG Co. at Rs.200 on credit 

• 60 bags of rice bought from DEF Ltd. at Rs.600 each and a 10% cash discount 

• 90Kg sugar bought from IJK Co. at Rs. 60 per kilo on credit 

Answer: 

Purchase Day Book

 

We do not consider the third transaction as the exchange was in cash and therefore, it will not be a part of a purchase day book.

Advantages

While working on a purchase day book, it provided some advantages over other types of record keeping which can be enumerated as follows:

• All entries of purchases are kept as a record in one place, therefore, it is easy to refer to and browse through these entries to look up for any information.

• All the important information regarding the transactions such as the number of items purchased or the amount of a product traded 

Relative Measure of Dispersion is one of the most important chapters in Statistics or Mathematical Economics. Various distributions are compared with the help of absolute and relative measures of dispersion. In the following article, we aim at discussing an absolute and relative measure of dispersion along with the Lorenz curve, a graphical measure of dispersion. Absolute and relative dispersion have numerous uses in the field of income distribution, wealth distribution, profits and wages distribution etc.

Relative Measures of Dispersion

A given series of data is accurately exhibited by the absolute measures of dispersion. But one of the major demerits of this is that if there is a need to compare dispersion for a series of different units then it cannot be used. The above-mentioned comparison can be done with relative dispersion.

Dispersion is of two types- absolute and relative dispersion. Absolute dispersion and relative dispersion are the tools to perform complete enumeration and relative comparison respectively. Absolute and relative measures of dispersion are correlated to each other. According to the relative dispersion definition, the dispersed data are expressed in some relative terms or percentage. It is possible to compare the various series as they are devoid of a particular unit. Relative Measure of Dispersion is a subset in the absolute measure of dispersion.

The Relative Measure of Dispersion formula can be derived by the ratio of absolute variability to the mean value or by the percentage of absolute variability. Another name of relative measures of dispersion is coefficients of dispersion. The following relative measures of variation will be briefly discussed:

• Coefficient of range.

• Coefficient of quartile deviation.

• The coefficient of mean deviation.

• Coefficient of standard deviation and coefficient of variation.

Relative Measure of Dispersion Formula

Coefficient of Range:

(H – L)/(H + L)

H = The highest value

L = The lowest value

Coefficient of Quartile Deviation:

(Q3 – Q1)/(Q3 + Q1)

Q3 = Third quartile

Q1 = First quartile

First and third quartile for individual series is calculated by the formula:

Q1= Size of (N + 1)/4th item and Q3 = Size of 3(N + 1)/4th item. Here N stands for the number of observations.

First and third quartile of discrete series is calculated as follows:

Primarily a column of cumulative frequency is formed based on each observation. Then the values of (N+1)/4 and 3(N+1)/4 are calculated based on the calculation of Q1 and Q3. Here, N stands for the summation of frequencies.

Coefficient of Mean Deviation:

Coefficient of Mean Deviation About Mean: (mean deviation about mean)/arithmetic mean.

Coefficient of Mean Deviation About Median: (mean deviation about median)/ median.

Coefficient of Mean Deviation About Mode: (mean deviation about mode)/ mode.

Coefficient of Standard Deviation:

Coefficient of Standard Deviation: σ/Mean

Here, σ= Standard deviation for the series.

Coefficient of Variation:

Coefficient of Variation: (Coefficient of standard deviation) X 100

Lorenz Curve:

The absolute measure of dispersion is measured graphically by the Lorenz curve. The actual curve and a line of equal distribution are represented graphically through the Lorenz curve. It displays the deviation between these two.

The divergence of an actual curve from the line of equal distribution is called Lorenz Coefficient. It is positively correlated with the distance of the Lorenz curve from the line of equal distribution.

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Did You Know?

• In the frequency distribution series, Q2 or the second quartile is also known as the median.

• Median is calculated in the same way as Q1 and Q3. Only, there is no usage of the term N/2.

• Construction of Lorenz curve is dependent upon two factors namely cumulative percentage for observation and cumulative percentage for frequency.

• While constructing Lorenz curve cumulative frequencies are plotted in the X-axis and cumulative items are plotted in the Y-axis.

• In the Lorenz, curve values commence from 0 to 100.

• The curve is a straight line with an inclination of 45 degrees to both the axes and connecting the origin to the point (100, 100).

• A good measure of dispersion is very effortless to calculate and easy to understand.

• Sampling fluctuations cannot always affect a good measure of dispersion.

The absolute measures of dispersion are as follows:

1. Range

2. Interquartile Range

3. Quartile Deviation

4. Mean Deviation

5. Standard Deviation

6. Lorenz curve 

From the above article, various absolute and relative measures of dispersion are vividly discussed. Absolute and relative dispersion is used in calculating several factors.