BASIC MATHS CONCEPTS FOR ECOP101

 The vertical axis is called the Y-axis.

 In Economics the Y or vertical axis always measures the independent variable.
 An independent variable is one that does not depend on another variable.
 The vertical axis has an origin at the centre where all values are zero.
 The measurements on the vertical axis are called intervals.
 Upward from 0, all Y intervals are positive.
 Downward from 0, all Y intervals are negative.

 The horizontal axis is called the X-axis.

 In Economics the X or horizontal axis always measures the dependent variable.
 A dependent variable is one that does depend on another variable.
 The measurements on the horizontal axis are also called intervals.
 To the left of 0, all X intervals are negative.
 To the right of 0, all X intervals are positive.

 In quadrant (quarter) 1  Both Y and X are positive.

 In quadrant (quarter) 2  Y is positive and X is negative.
 In quadrant (quarter) 3  Both Y and X are negative.
 In quadrant (quarter) 4  Y is negative and X is positive.

Most Economics graphs use the 1st quadrant only.

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Exercise 1:

 Draw the following set of axis and plot the following points:

Point A: Y = 30 and X = 10.

Point B: Y = -10 and X = -20
Point C: Y = 10 and X = -10
Point D: Y = -20 and X = 30
Point E: Y = 0 and X = 20
Point F: Y = -20 and X = 0

Check your answer in the answer sheets at the end of this document.

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 A table in Economics can also be called a schedule.
 The table or schedule in the slide above has 2 columns and 4 rows of data.
 The first column shows Y values. The Y values are independent of the X values.
 The second column shows X values. The X values depend on (or are caused by) the Y
values.
 When we ‘read’ a table we read each row at a time.
Row 1 shows when Y = 10, X = 10.
Row 2 shows when Y = 16, X = 20.
Row 3 shows when Y = 20, X = 40.
Row 4 shows when Y = 30, X = 50.

 As we move down the table, Y values increase.

 As we move down the table, X values also increase.
 When both variables increase at the same time, the relationship between them is
positive.

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 As we move up the table, Y values decrease.
 As we move up the table, X values also decrease.
 When both variables decrease at the same time, the relationship between them is
positive.

 If we plot every set of variables in each row on a graph that shows only the first
quadrant, the plotted points rise upward from left to right.
 The resultant line has bends and kinks in it (see black line on the graph).
 We call this a non-linear positive relationship.

 In economics we use simplified theory (see Online tutorial 1 for an explanation of

ceteris paribus).
 In order to simplify the relationship between Y and X, we straighten out the line (see
blue line on the graph).
 The new simplified graph is not accurate but shows a trend or generalisation.
 In statistics these lines are called ‘lines of best fit’.
 This new simplified line shows a positive linear relationship.

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Exercise 2:
Draw a set of axes showing only the 1st quadrant.
Label your Y axis ‘Hours of Cloud Cover’. This is your independent variable.
Divide your Y axis into intervals of 2, up to 10.
Label your X axis ‘Chance of Rain’. This is your dependent variable.
Divide your X axis into intervals of 10, up to 50.
Make sure you label the origin.
Chance of rain depends on hours of cloud cover.
Hours of cloud cover does not depend on the chance of rain.

Now plot the values in table 1 below onto your set of axes.
Table 1. The relationship between hours of cloud cover and chance of rain.
Hours of Cloud Cover Chance of Rain (%)
2 10
4 15
6 35
8 40
10 45

Once you have plotted the actual values on your graph, draw a line of ‘best fit’ by joining
the first and last points on your graph.
Label your curve ‘Cloud cover’.

Check your answer in the answer sheets at the end of this document.

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 The table or schedule in the slide above has 2 columns and 3 rows of data.
 The first column shows Y values. The Y values are independent of the X values.
 The second column shows X values. The X values depend on (or are caused by) the Y
values.
 When we ‘read’ a table we read each row at a time.
Row 1 shows when Y = 10, X = 50.
Row 2 shows when Y = 20, X = 20.
Row 3 shows when Y = 30, X = 10.

 As we move down the table, Y values increase.

 As we move down the table, X values decrease.
 As we move up the table, Y values decrease.
 As we move up the table, X values increase.
 When one variable increases while the other variable decreases, the relationship
between them is negative.

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  If we plot every set of variables in each row on a graph that shows only the first
quadrant, the plotted points fall downward from left to right.
 The resultant line has bends and kinks in it (see black line on the graph).
 We call this a non-linear negative relationship.
 In economics we use simplified theory (see Online tutorial 1 for an explanation of
ceteris paribus).
 In order to simplify the relationship between Y and X, we straighten out the line (see
blue line on the graph).
 The new simplified graph is not accurate but shows a trend or generalisation.
 In statistics these lines are called ‘lines of best fit’.
 We call this new line a negative linear relationship.

Exercise 3:
Draw a set of axes showing only the 1st quadrant.
Make sure you label the origin.
Label your Y axis ‘Hours of Sunshine’. This is your independent variable.
Divide your Y axis into intervals of 2, up to 10.
Label your X axis ‘Chance of Rain’. This is your dependent variable.
Divide your X axis into intervals of 10, up to 50.

The chance of rain depends on hours of sunshine.

Hours of sunshine does not depend on the chance of rain.

Now plot the values in table 2 below onto your set of axes.
Table 2. The relationship between hours of sunshine and the chance of rain.
Hours of Sunshine Chance of Rain (%)
10 10
8 15
6 35
4 40
2 45

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Once you have plotted the actual values on your graph, draw a line of ‘best fit’ by joining
the first and last points on your graph.
Label your curve ‘Sunshine’.

Check your answer in the answer sheets at the end of this document.

Plotting the relationship between two variables gives us one curve.

The first table above gave us a curve that rises upward from left to right. That curve has
been labelled ‘Positive trend’.

The second table above gave us a curve that falls from left to right. That curve has been
labelled ‘Negative trend’.

Providing we can marry the labels on the axes into a single label on each set of axis, we can
combine the curves to show the two trends together.

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The point where the two curves (negative trend and positive trend) cross is called the
equilibrium. This is the only point where the two sets of data correlate.

This equilibrium point does not guarantee a favourable outcome. It is possible that the
equilibrium point shows a situation that is not ideal. It is merely a correlation point and not
a judgement of any sort.

Equilibrium is defined as a state of balance where two opposing forces are equal.

Exercise 4:
Draw a single set of axes (1st quadrant only).

Redraw the smooth trend curves from exercise 2 (Cloud cover) and exercise 3 (Sunshine)
together onto the new set of axes.

Now answer these questions:

A. How many hours of sunshine are represented by the equilibrium?
B. How many hours of cloud cover are represented by the equilibrium?
C. What is the chance of rain at equilibrium?

Check your answer in the answer sheets at the end of this document.

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Exercise 5: Now answer the following multiple choice questions:

Question 1
If we were to say that two variables are positively related, this means that:
A. the relationship between the two is purely random.
B. the relationship between the two would graph as a line sloping downward.
C. the relationship between the two would graph as a horizontal line.
D. the relationship between the two would graph as a line sloping upward.
E. an increase in one variable can be associated with an increase in the other.
F. the relationship between the two cannot be depicted graphically in any simple way.
G. D and E above.

Question 2
From the information in the table below, it appears that:

Year X y
2010 6,1 143
2011 6,2 125
2012 6,5 112

A. x and y tend to exhibit a negative relationship.

B. there is no relationship between x and y
C. x and y tend to exhibit a positive relationship.
D. there is first a negative and then a positive relationship between x and y.
E. there is first a positive and then a negative relationship between x and y.

Question 3
The relationship between two variables that move in opposite directions is shown
graphically by a line that is
A. positively sloped.
B. relatively steep.
C. relatively flat.
D. negatively sloped.
E. curved.

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Question 4
Use the graph to answer Question 4.

Which of the following statements is correct?

Which of the following statements is correct?
A. When Y = 16, X = 0.
B. When Y = 8, X = 0.
C. The curve shows a negative relationship between Y and X.
D. A change in X causes a change in Y.
E. Y is the independent variable in this case.

Question 5
If we were to say that two variables are positively related, this means that
A. the relationship between the two is purely random.
B. the relationship between the two would graph as a line sloping downward.
C. the relationship between the two would graph as a horizontal line.
D. an increase in one variable can be associated with an increase in the other.
E. the relationship between the two cannot be depicted graphically in any simple
way.
F. B and D.

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Question 6
Use the graph below to answer the question below.

From this it can be concluded that

A. x and y have a positive, non-linear relationship.
B. x and y are negatively related.
C. as x decreases, y decreases.
D. x and y are inversely related.
E. x and y exhibit no clear relationship.

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 ANSWERS

Exercise 1:
Point A: Y = 30 and X = 10.
Point B: Y = -10 and X = -20
Point C: Y = 10 and X = -10
Point D: Y = -20 and X = 30
Point E: Y = 0 and X = 20
Point F: Y = -20 and X = 0

F D

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Exercise 2:

Table 1. The relationship between Cloud Cover and Chance of Rain.

Hours of Cloud Cover Chance of Rain (%)

2 10
4 15
6 35
8 40
10 45

Graph 1: The relationship between Cloud Cover and Chance of Rain.

Cloud cover
10

8
Cloud Cover (hrs)

0
10 20 30 40 50

Chance of Rain (%)

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Exercise 3:
Table 2. The relationship between Sunshine and Chance of Rain.
Hours of Sunshine Chance of Rain (%)
10 10
8 15
6 35
4 40
2 45

Graph 2: The relationship between Sunshine and Chance of Rain.

10

8
Sunshine (hrs)

2 Sunshine

0
10 20 30 40 50

Chance of Rain (%)

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Exercise 4:
Redraw the smooth trend curves from exercise 2 (cloud cover) and exercise 3 (sunshine)
together onto the new set of axes.

Now answer these questions:

A. What percentage of cloud cover is represented by the equilibrium?
B. What percentage of sunshine is represented by the equilibrium?
C. What is the chance of rain at equilibrium?

Graph 3: The relationship between the weather and the chance of rain.

Cloud
10 cover

8
Weather (hrs)

Sunshine
2

0
10 20 30 40 50

Chance of Rain (%)

A. Cloud cover at equilibrium = 6 hours.

B. Sunshine at equilibrium = 6 hours.
C. Chance of rain at equilibrium = approx. 28%.

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Exercise 5: Multiple choice questions:

1.
If we were to say that two variables are positively related, this means that:
A. the relationship between the two is purely random.
B. the relationship between the two would graph as a line sloping downward.
C. the relationship between the two would graph as a horizontal line.
D. the relationship between the two would graph as a line sloping upward.
E. an increase in one variable can be associated with an increase in the other.
F. the relationship between the two cannot be depicted graphically in any simple way.
G. D and E above.

2.

From the information in the table below, it appears that:

Year X y
2010 6,1 143
2011 6,2 125
2012 6,5 112

A. x and y tend to exhibit a negative relationship.

B. there is no relationship between x and y
C. x and y tend to exhibit a positive relationship.
D. there is first a negative and then a positive relationship between x and y.
E. there is first a positive and then a negative relationship between x and y.

3.

The relationship between two variables that move in opposite directions is shown
graphically by a line that is
A. positively sloped.
B. relatively steep.
C. relatively flat.
D. negatively sloped.
E. curved.

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4.

Use the graph to answer Question 4.

Which of the following statements is correct?

F. When Y = 16, X = 0.
G. When Y = 8, X = 0.
H. The curve shows a negative relationship between Y and X.
I. A change in X causes a change in Y.
J. Y is the independent variable in this case.

5.

If we were to say that two variables are negatively related, this means that
A. the relationship between the two is purely random.
B. the relationship between the two would graph as a line sloping downward.
C. the relationship between the two would graph as a horizontal line.
D. an increase in one variable can be associated with a decrease in the other.
E. the relationship between the two cannot be depicted graphically in any simple
way.
F. B and D.

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6.
Use the graph below to answer the question below.

From this it can be concluded that

F. x and y have a positive, non-linear relationship.
G. x and y are negatively related.
H. as x decreases, y decreases.
I. x and y are inversely related.
J. x and y exhibit no clear relationship.

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