Principles of Economics/Graphs

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[edit] Graph reading

The first step to understanding economics models is comprehending graphs. Here the x axis is Q, quantity, and the y axis is P, price. The point at the top right indicates Q* quantity of a good each being sold at price P*; the horizontal and vertical lines are there for facilitation/marker purposes. The point to its left has only half the extent x-axis-wise, and therefore involves half the quantity. The point below the first has only half the extent y-axis-wise, and therefore involves half the price.

[edit] Graph reading continued

This may appear to be a similar graph, but it is entirely different because here the y axis is the quantity Q2 of another good. The top right point involves Q* of good 1 and Q2* of good 2. The point to its left involves half as much of good 1, while the point below it involves half as much of good 2.