Graphs and Formulas

8/3/2019 Graphs and Formulas

1/14

Using Graphs and Formulas

Appendix

A graph is like a street

mapit is a simplified

version of reality.


2/14

Appendix

FIGURE 1A-1

Bar Graphs and Pie Charts

Graphs of One Variable


3/14

Appendix

FIGURE 1A-2

Time-Series Graphs

Graphs of One Variable


4/14

Appendix

FIGURE 1A-3

Plotting Price and Quantity

Points in a Graph

Graphs of Two Variables


5/14

Appendix

FIGURE 1A-4

Calculating the

Slope of a Line


Slopes of Lines

Change in value on the vertical axis y RiseSlope

Change in value on the horizontal axis x Run= = =

($12 $14) 20.2

(65 55) 10

Price of pizzaSlope

Quantity of pizza

= = = =


6/14


7/14

Appendix

FIGURE 1A-6

Graphing the Positive

Relationship between

Income and Consumption


Positive and Negative Relationships


8/14

Appendix

FIGURE 1A-7

Determining Cause and Effect


Determining Cause and Effect


9/14

Appendix


Are Graphs of Economic Relationships Always Straight Lines?

The graphs of relationships between two economic

variables that we have drawn so far have been straight

lines.

The relationship between two variables is linearwhen itcan be represented by a straight line.

Few economic relationships are actually linear.


10/14

Appendix


Slopes of Nonlinear Curves FIGURE 1A-8

The Slope of a Nonlinear Curve


11/14

Appendix

Formulas

Formulas for a Percentage Change

100xGDP

GDPGDP

2003

20032004

100x)periodfirsttheinValue

periodfirsttheinValue-periodsecondtheinValue(changePercentage =

One important formula is the percentage change.

Thepercentage change is the change in some economic

variable, usually from one period to the next, expressed as a

percentage.


12/14

Appendix

Formulas

Formulas for the Areas of a Rectangle and a Triangle

FIGURE 1A-9

Showing a Firms Total

Revenue on a Graph

heightxbaserectangleaofArea =


13/14

Appendix

Formulas

Formulas for the Areas of a Rectangle and a Triangle

FIGURE 1A-10

The Area of a Triangle

heightxbasextriangleaofArea 1/2=


14/14

Appendix

Formulas

Summary of Using Formulas

1 Make sure you understand the economic concept

that the formula represents.

2 Make sure you are using the correct formula for the

problem you are solving.

3 Make sure that the number you calculate using theformula is economically reasonable. For example, if

you are using a formula to calculate a firms revenue

and your answer is a negative number, you know

you made a mistake somewhere.

Whenever you must use a formula, you should follow

these steps:

Documents

Graphs and Formulas