GRAPHS IN ECONOMICS

1
GRAPHS IN ECONOMICS
2
STUDY GUIDE

• MULTIPLE CHOICE, 4-19
• SHORT ANSWER, 2-8

3
A POSITIVE RELATIONSHIP

• X Y
• 0 5
• 1 10
• 2 15
• 3 20
• 4 25
• 5 30
• 6 35
• 7 40
• 8 45
• 9 50

4
A NEGATIVE RELATIONSHIP

• X Y
• 0 20
• 1 18
• 2 16
• 3 14
• 4 12
• 5 10
• 6 8
• 7 6
• 8 4
• 9 2
• 10 0

5
SLOPE

• CHANGE IN Y GIVEN A CHANGE IN X
• How much one variable changes when another
  variable changes.
• How much more people wish to sell as the price
  rises.
• How much current consumption must fall to
  increase capital production

6
SLOPE ON A STRAIGHT LINE

• RISE OVER RUN
• CHANGE IN Y Y2-Y1
• DIVIDED BY
• CHANGE IN X X2-X1

7
POSITIVE RELATIONSHIPSTRAIGHT LINE

• X Y
• 1 10
• 2 15
• 3 20
• 4 25
• 5 30
• 6 35
• 7 40
• 8 45
• 9 50
• 10 55

• Y2-Y1
• 15-10 5
• X2-X1
• 2-1 1
• 5/15
• THE SLOPE IS 5

8
NEGATIVE RELATIONSHIPSTRAIGHT LINE

• X Y
• 0 20
• 1 18
• 2 16
• 3 14
• 4 12
• 5 10
• 6 8
• 7 6
• 8 4
• 9 2
• 10 0

• Y2-Y1
• 12-14 -2
• X2-X1
• 4-3 1
• -2/1 -2
• THE SLOPE IS -2

9
SLOPE ON A CURVE

• X Y
• 0 16
• 1 11
• 2 8
• 3 7
• 4 8
• 5 11
• 6 16
• 7 23
• 8 32
• 9 43
• 10 56

10
SLOPE ON A CURVE

• First the curve has a negative slope, it reaches
  a minimum and then it has a positive slope.
• At the minimum the slope is zero.

11
SLOPE ACROSS AN ARC

• CREATE A STRAIGHT LINE BETWEEN THE TWO POINTS OF
  THE ARC
• CALCULATE SLOPE JUST AS FOR A STRAIGHT LINE

12
SLOPE ACROSS AN ARC

• Pt. 1 (20,8)
• Pt. 2 (60,16)
• Y2-Y1
• 16-8 8
• X2-X1
• 60-20 40
• 8/40 .2
• THE SLOPE IS .2

13
SLOPE ACROSS AN ARC

• Pt. 2 (16, 0)
• Pt. 1 (7, 30)
• Y2-Y1
• 16-7 9
• X2-X1
• 0-30 -30
• 9/-30
• THE SLOPE IS -.3

14
SLOPE AT A POINT ON A CURVE

• Draw a tangent to the curve
• Calculate the slope along the tangent
• Note that the slope should be comparable to the
  slope along an arc.

15
SLOPE AT A POINT ON A CURVE

• Pt. 2 (0, 10)
• Pt. 1 (40, 4)
• Y2-Y1
• 10-4 6
• X2-X1
• 0-40 -40
• 6/-40
• THE SLOPE IS -.15

16
SLOPE AT A POINT ON A CURVE

• Pt. 2 (3, 3)
• Pt. 1 (8, 23)
• Y2-Y1
• 3-23 -20
• X2-X1
• 3-8 -5
• -20 / -5
• THE SLOPE IS 4