Part One: Introduction to Graphs

Mathematics and Economics In economics many relationships are represented graphically. Following examples demonstrate the types of skills you will be required to know and use in introductory economics courses.

An individual buyer's demand curve for corn The law of demand: –Consumers will buy more of a product as its price declines.

Demand Curve for Paperback Books Demand reflects an individual's willingness to buy various quantities of a good at various prices.

The concepts you will learn in this section are: Constant vs. variable. Dependent vs. independent variable. x and y axes. The origin on a graph. x and y coordinates of a point. Plot points on a graph.

Variables, Constants, and Their Relationships After reviewing this unit, you will be able to: –Define the terms constant and variable. –Identify whether an item is a constant or a variable. –Identify whether an item is a dependent or independent variable

Variables and Constants Characteristics or elements such as prices, outputs, income, etc., are measured by numerical values. The characteristic or element that remains the same is called a constant. For example, the number of donuts in a dozen is a constant.

Some of these values can vary. The price of a dozen donuts can change from $2.50 to $3.00. We call these characteristics or elements variables.

Which of the following are variables and which are constants? –The temperature outside your house. –The number of square feet in a room that is 12 ft by 12 ft. –The noise level at a concert.

Relationships Between Variables We express a relationship between two variables by stating the following: The value of the variable y depends upon the value of the variable x. We can write the relationship between variables in an equation. y = a + bx

The equation also has an "a" and "b" in it. These are constants that help define the relationship between the two variables.

y = a + bx In this equation the y variable is dependent on the values of x, a, and b. The y is the dependent variable. The value of x, on the other hand, is independent of the values y, a, and b. The x is the independent variable.

An Example... A pizza shop charges 7 dollars for a plain pizza with no toppings and 75 cents for each additional topping added. The total price of a pizza (y) depends upon the number of toppings (x) you order.

Price of a pizza is a dependent variable and number of toppings is the independent variable. Both the price and the number of toppings can change, therefore both are variables.

The total price of the pizza also depends on the price of a plain pizza and the price per topping. The price of a plain pizza and the price per topping do not change, therefore these are constants.

The relationship between the price of a pizza and the number of toppings can be expressed as an equation of the form: y = a + bx

If we know that x (the number of toppings) and y (the total price) represent variables, what are a and b? In our example, "a" is the price of a plain pizza with no toppings and "b" is the price of each topping. They are constant.

We can set up an equation to show how the total price of pizza relates to the number of toppings ord

If we create a table of this particular relationship between x and y, we'll see all the combinations of x and y that fit the equation. For example, if plain pizza (a) is $7.00 and price of each topping (b) is $.75, we get: y = x

Graphs After reviewing this unit you will be able to: –Identify the x and y axes. –Identify the origin. on a graph. –Identify x and y coordinates of a point. –Plot points on a graph.

A graph is a visual representation of a relationship between two variables, x and y. A graph consists of two axes called the x (horizontal) and y (vertical) axes. The point where the two axes intersect is called the origin. The origin is also identified as the point (0, 0).

Coordinates of Points A coordinate is one of a set of numbers used to identify the location of a point on a graph. Each point is identified by both an x and a y coordinate.

Identifying the x- coordinate –Draw a straight line from the point directly to the x-axis. –The number where the line hits the x- axis is the value of the x-coord

Identifying the y- coordinate –Draw a straight line from the point directly to the y-axis. –The number where the line hits the axis is the value of the y- coordinate.

Notation for Identifying Points Coordinates of point B are (100, 400) Coordinates of point D are (400, 100)

Plotting Points on a Graph Step One –First, draw a line extending out from the x-axis at the x- coordinate of the point. In our example, this is at 200.

Step Two –Then, draw a line extending out from the y-axis at the y- coordinate of the point. In our example, this is at 300.

Step Three –The point where these two lines intersect is at the point we are plotting, (200, 300).

Part Two: Equations and Graphs of Straight Lines

Economics and Linear Relationships One of the most basic types of relationships is the linear relationship. Many graphs in economics will display linear relationships, and you will need to use graphs to make interpretations about what is happening in a relationship.

Inverse relationship between ticket prices and game attendance Two sets of data which are negatively or inversely related graph as a downsloping line. The slope of this line is -1.25

Budget lines for $600 income with various prices for asparagus As the price of asparagus rises, less and less can be purchased if the entire budget is spent on asparagus.

You will learn in this section to... Draw a graph from a given equation. Determine whether a given point lies on the graph of a given equation. Define slope. Calculate the slope of a straight line from its graph.

Be able to identify if a slope is positive, negative, zero, or infinite. Identify the slope and y-intercept from the equation of a line. Identify y-intercept from the graph of a line. Match a graph with its equation.

Equations and Their Graphs After reviewing this unit, you will be able to: –Draw a graph from a given equation. –Determine whether a given point lies on the graph of a given equation.

Graphing an Equation Generate a list of points for the relationship. Draw a set of axes and define the scale. Plot the points on the axes. Draw the line by connecting the points.

1. Generate a list of points for the relationship In the pizza example, the equation is y = x. You first select values of x you will solve for. You then substitute these values into the equation and solve for they values.

2. Draw a set of axes and define the scale Once you have your list of points you are ready to plot them on a graph. The first step in drawing the graph is setting up the axes and determining the scale. The points you have to plot are: (0, 7.00), (1, 7.75), (2, 8.50), (3, 9.25), (4, 10.00)

Notice that the x values range from 0 to 4 and the y values go from 7 to 10. The scale of the two axes must include all the points. The scale on each axis can be different.

3. Plot the points on the axes After you have drawn the axes, you are ready to plot the points. Below we plot the points on a set of axes.

4. Draw the line by connecting the points Once you have plotted each of the points, you can connect them and draw a straight line.

Checking a Point in the Equation If, by chance, you have a point and you wish to determine if it lies on the line, you simply go through the same process as generating points. Use the x value given in the point and insert it into the equation. Compare the y value calculated with the one given in the point.

Example Does point (6, 10) lie on the line y = x given in our pizza example? To determine this, we need to plug the point (6, 10) into the equation. The point with an x value of 6 that does lie on the line is (6, 11.5). This means that the point (6, 10) does not lie on our line

Slope After reviewing the unit you will be able to: –Define slope. –Calculate the slope of a straight line from its graph. –Identify if a slope is positive, negative, zero, or infinite. –Identify the slope and y-intercept from the equation of a line. –Identify the y-intercept from the graph of a line.

What is Slope? The slope is used to tell us how much one variable (y) changes in relation to the change of another variable (x). This can also be written in the form shown on the right.

As you may recall, a plain pizza with no toppings was priced at 7 dollars. As you add one topping, the cost goes up by 75 cents.

Calculating the Slope

Three steps in calculating the slope of a straight line Step One: Identify two points on the line. Step Two: Select one to be (x1, y1) and the other to be (x2, y2). Step Three: Use the slope equation to calculate slope.

Example Points (15, 8) and (10, 7) are on a straight line. What is the slope of this line?

Example What is the slope of the line given in the graph? The slope of this line is 2.

The greater the slope, the steeper the line. Keep in mind, you can only make this comparison between lines on a same graph.

The Sign of Slope If the line is sloping upward from left to right, so the slope is positive (+). In our pizza example, as the number of toppings we order (x) increases, the total cost of the pizza (y) also increases.

If the line is sloping downward from left to right, so the slope is negative (-). For example, as the number of people that quit smoking (x) increases, the number of people contracting lung cancer (y) decreases.

Equation of a Line The equation of a straight line is given on the right. In this equation: "b" is the slope of the line, and "a" is the y-intercept,

Equation for Pizza Example the equation for our pizza example is: y = x The slope of the line tells us how much the cost of a pizza changes as the number of toppings change

y-intercept In the equation y = a + bx, the constant labeled "a" is called the y-intercept. The y-intercept is the value of y when x is equal to zero.

y-intercept of Pizza Example The equation of the relationship is given by y = x. The y-intercept occurs when there are no additional toppings (x = 0), which is the price of a plain pizza, or $7.00.

Matching a Graph of a Straight Line with Its Equation After reviewing this unit you will be able to: –Match a graph with its equation

Matching Using Slope and y- intercept We can prove that this is the graph of the equation y = 2x + 10 by checking for two things: Does the line cross the y-axis at 10? Is the slope of the line on the graph 2?

Example Consider the following graph at the right. Is the equation of the line shown in the graph above: y = x, or y = 6 - (1/4) x?