Graphs:
A lot of data and information are conveyed by graphs. It is a great idea to handle the usage of graphs in order to study economics well.
Graphs are consisted with two axes, y-axes and x-axes. The intersection point is called the origin where the values are set to zero. The quantities are showed on the graphs by distances from the origin. With a series of dots with different x and y coordinates, we may find the relationship between the two variables. There are three basic kind of diagrams: scatter diagrams, time-series graphs and cross-section graphs
Scatter diagram is used to determine if a relationship exists between two variables and what kind of relationship that is. For example, the price of clothes and the consumption of clothes should be inversely proportional to each other (probably). That is when the price of clothes rises, the consumption of clothes should rise. Although there may be a correlation between these two variables, however, we can not determine if there is a causation relationship between them. The information we get from the graphs is limited and we can not assume unproved things.
It is important that you read the graph carefully, both the break and the scale. A graph can mislead you if you don’t interpret the graph correctly. A lot of businesses try to stretch or compress the scale of axes in order to get visual misleading.
Learn more about graphs will only benefit your future study of economics.
