A practical-theoretical help for 1 years economics students

1. Graphs in Economics

2. Dr. V. Ligorio
Graphs, Variables, and Economic Models
A quantity that can take on more than
one value is called a variable.
The line along which values of the x variable are measured is
called the horizontal axis or x-axis.
The line along which values of the y-variable are
measured is called the vertical axis or y-axis.
The point where the axes of a two-variable graph meet is the
origin.
A causal relationship exists between two variables when the
value taken by one variable directly influences or determines the
value taken by the other variable.
In a causal relationship, the determining variable is called the
independent variable; the variable it determines is called the
dependent variable.

3. Dr. V. Ligorio

4. Dr. V. Ligorio
A curve is a line on a graph that depicts a
relationship between two variables.
It may be either a straight line or a curved line.
If the curve is a straight line, the variables have
a linear relationship. If the curve is not a
straight line, the variables have a nonlinear
relationship.

5. Dr. V. Ligorio

6. Dr. V. Ligorio
Two variables have a positive relationship when an increase in the
value of one variable is associated with an increase in the value of
the other variable.
It is illustrated by a curve that slopes upward from left to right.
Two variables have a negative relationship when an increase in
the value of one variable is associated with a decrease in the value
of the other variable.
It is illustrated by a curve that slopes downward from left to right.

7. Dr. V. Ligorio
The horizontal intercept of a curve is he point at which it hits
the horizontal axis; it indicates the value of the x variable
when the value of the y variable is zero.
The vertical intercept of a curve is the point at which it hits the
vertical axis; it shows the value of the y-variable when the
value of the x-variable is zero.
The slope of a line or curve is a measure of how steep it is. The
slope of a line is measured by “rise over run”— the change in
the y-variable between two points on the line divided by the
change in the x-variable between those same two points.

8. Dr. V. Ligorio

9. Dr. V. Ligorio

10. Dr. V. Ligorio

11. Dr. V. Ligorio
A nonlinear curve is one in which
the slope is not the same between
every pair of points

12. The slope of a Nonlinear Curve
Dr. V. Ligorio

13. Calculating the slope along a
Nonlinear Curve
Dr. V. Ligorio
2 methods :
1) The arc method of calculating the slope
2)The point method of calculating the
slope

14. The arc method
Dr. V. Ligorio
An arc of a curve is some piece or segment of that curve.
To calculate the slope along a nonlinear curve using the
arc method, you draw a straight line between the two
endpoints
of the arc. The slope of that straight line is a measure
of the average slope of the curve between those two
end-points.
Ex.

15. The point method
Dr. V. Ligorio

16. Maximum and minimum points
Dr. V. Ligorio
A nonlinear curve may
have a maximum point,
the highest point along
the curve. At the
maximum, the slope of
the curve changes from
positive to negative.
A nonlinear curve may
have a minimum point,
the lowest point along
the curve. At the
minimum, the slope of
the curve changes from
negative to positive.

17. Calculating the area below or above
the curve
Dr. V. Ligorio