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Much of the analysis in economics deals with relationships between variables. A variable is simply a quantity whose value can change. A graph A pictorial representation of the relationship between two or more variables. is a pictorial representation of the relationship between two or more variables. The key to understanding graphs is knowing the rules that apply to their construction and ...
Step 1. Draw and Label the Axes. The two variables shown in the table are the number of passengers taking the bus on a particular day and the club’s revenue from that trip. We begin our graph in Panel (a) of Figure 35.2 “Plotting a Graph” by drawing two axes to form a right angle. Each axis will represent a variable.
Key model. The Production Possibilities Curve (PPC) is a model that captures scarcity and the opportunity costs of choices when faced with the possibility of producing two goods or services. Points on the interior of the PPC are inefficient, points on the PPC are efficient, and points beyond the PPC are unattainable.
Select two points; we have selected points B and D. The slope equals the vertical change divided by the horizontal change between the two points. Between points B and D, the slope equals $200/20 passengers = $10/passenger. The slope of this curve is the price per passenger.
We will refer to the vertical line on the left hand side of the graph as the y-axis. This is the standard convention for graphs. In economics, we commonly use graphs with price (p) represented on the y-axis, and quantity (q) represented on the x-axis. An intercept is where a line on a graph crosses (“intercepts”) the x-axis or the y-axis.
A graph enables us to visualize the relationship between two variables. To make a graph, set two lines perpendicular to each other: The horizontal line is called the x -axis. The vertical line is called the y -axis. The common zero point is called the origin . Scatter diagram is a graph of the value of one variable against the value of another ...
One of the most common types of graphs used in economics is called a time-series graph. A time-series graph shows how the value of a particular variable or variables has changed over some period of time. One of the variables in a time-series graph is time itself. Time is typically placed on the horizontal axis in time-series graphs.
