Initial Publication Date: April 12, 2016
What should the student get out of this module?
After completing this module, a student should be able to:
- Understand the importance of using graphs in economics.
- Understand the basic structure of two-dimensional graphs, including axes and the values of variables.
- Understand how the slope of a line on a graph shows how two variables are related.
- Recognize positive relationships, inverse relationships and nonlinear relationships on a graph of two economic variables.
- Recognize that a graph of a relationship between two economic variables does not imply that a change in one variable causes a change in the other.
- Recognize where graphs are used in microeconomics and macroeconomics.
What we don't include on this page
This module does not illustrate the use of all four quadrants of the Cartesian coordinate system. We also did not include content relating total values to marginal (incremental) values, nor did we include terminology from calculus describing changes in the slope of a nonlinear function.
Why is it difficult for students?
Understanding and using graphs can be difficult for students for several reasons.
- Many students are unfamiliar with the basic ideas of visually representing and interpreting linear and nonlinear relationships on graphs. Students especially struggle with relationships that change with the values of the variables (e.g. increasing at a decreasing rate).
- Students may be uncomfortable with the numerous ways that graphs can be used in economics. Moving from relatively simple two-dimensional relationships like supply curves, demand curves and budget lines to modeling and interactions between relationships (e.g. supply and demand together on the same graph) is a big leap for many students and should be approached with careful attention to detail and purpose.