Applying Graphs to Economics

Graphs provide a means to clearly show economic relationships in two-dimensional space. Economic
analysis is often concerned with two variables confined to the upper right-hand(northeast) quadrant of the
coordinate number system.

Define direct relationship

A relationship between two numbers or other variables where an increase or decrease in one variable
causes the same change to occur in the second variable.

Define inverse relationship

A type of correlation that exists between two different numbers. In this case, when one number has a
value that rises, then the other will correspondingly fall in the value of the first number.

What is the Slope of a line?

The ratio of change in the variable on the vertical axis (the rise or fall) to change in the variable on the
horizontal axis.
The slope of a line in the plane containing the x and y axes is generally represented by the letter m, and
is defined as the change in the y coordinate divided by the corresponding change in the x coordinate,
between two distinct points on the line.

What is the Slope of a Curve?

The concept of a slope is central to differential calculus. For non-linear functions, the rate of change
varies along the curve. The derivative of the function at a point is the slope of the line tangent to
the curve at the point, and is thus equal to the rate of change of the function at that point.

What can change other than price?

When income increases, for example, the whole demand curve shifts upward

How can I tell the difference between a movement along a curve and a shift in the curve?
When price changes, there is movement along a curve. When something other than price changes, the
whole curve shifts.