Economic is a very interesting subject but not all are fond of this particular subject. At first, it may seem a little confusing with all mathematical things happening but once you are tutored and guided properly, you can excel in this subject. You can refer to the Advantages of availing economics homework help for further details from different professional websites.
Before we go into the details on economic graphs and its uses, it is important for you to get a clear concept of the term economic graphs. Graphs are often used in economics for better illustrations in economic principles and trends. Graphs are not just used in economics but in many other subjects as well.
This kinds of graph used in economics are very different from the ones use for other sciences. Most common type of graph in economic is supply and demand graph.
Basics of economics – Supply and demand
Supply and demand, one of the most important chapters in economics is considered to be the backbone of the whole market economy. The total amount of a particular item that is accessible to customers is called supply.
Whereas demand, on the other hand, is a customer’s desire on buying a product and willing to pay for the desired product. As for example, bath supplies are something you cannot ignore. Their demand increases depending on their price, packaging, and advertising of the product. People are often attracted to fancy things. There is no way one gets attracted to anything to do with boring, even when it comes to packaging of a particular product.
Companies usually stress more on the packaging since that is the first thing exposed to the customers. The supply of a product actually depends on its demand. If a particular item gets a lot of demand from its customers then the product demand increases and company is bound to increase their product sale. Supply and demand are therefore considered to be the backbone of economics. Price is just considered to be a reflection of the whole supply and demand concept.
Supply and demand relationship
It is often supply and demand that affects the price. If a particular item has a high demand then it is more likely for the price of the item to increase. This is because of relationship between demand and price. If demand increases, so does price.
For example, you have been waiting for releasing of your favourite band’s new CD and when the CD is out you realise know that the rates are really high. But since you and many others like you have been waiting, the CDs will be sold anyway. Equilibrium is the term used when both supply and demand are equal. The economy is then said to be at equilibrium.
Graphing information in economics
Quantity is represented asdistance on a line. Horizontal line present on a graph is called the x-axis and the line that is vertical is called the y-axis. The pace where the two lines originate is called the origin.
Types of economic graphs
There are basically three main types of economic graphs.
- Scatter diagrams –
Here the variables correlated and this can be said so since the graph is plotted in such a way that value of one variable is plotted against the value of the other.
- Time series graphs –
Here is relationship is between times. Measured on x and y-axis, this type of graph shows the change in direction, the change of speed and also its trend. This causes the rise and fall on the scale. Example of this type of graph is the price of oil and unemployment rate over time.
- Cross section graphs –
This is used for finding the number of population of different groups at a particular time.
Uses and importance of economic graphs
The relationships between the important economic variables are usually showed on graphs and this is the reason graphs has an important role to play in economics. The relationship between the variables can either be positive or negative. The graph with a positive relationship will have a slope going upward and the one with a negative relationship will have a slope going upward and one going downward.
This slope shows how one variable affects the other. There are even chances of having curved graphs that make a tangent. The four very important relationships between variables are as follows –
- Positive or direct relationship –
Both the variables move in the same direction together. In this case, an upward slope is made.
- Negative or inverse relationship –
Here both the variables move in the opposite directions creating a downward slope.
- Maximum or minimum –
Here the variables changes direction after reaching a certain point.
- Unrelated –
Here the variables do not affect each other, that is, if one increases then the other remains unaffected.
Importance of economics
- It will help you understand market and what happens in market and economy.
- Economics will help you deal with shortage of raw materials. We are living in the time where we need to understand the value of raw materials like oil and gas. If not dealt with properly now then there are high chances of facing problems in the near future.
- This will make you aware of what is happening in the economy and try to find out the reason behind poverty, unemployment, low economic growth and try to find out a proper solution to these issues.
- A good economist will be aware of the fact that there are different potential outcomes to different variables.
Economics will give you a clear idea of how domestic and international markets work. This will widen your knowledge and prepare you for a better future not just on a carrier basis but also as a good human being. It will teach you how to use resources and also make wise decisions.
With a proper knowledge of economics, you can effectively manage your own finances without looking for someone else to do it for you. And to help you understand this subject better, graphs are used so that you can easily understand the terms used in economics.