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Introduction

Introduction to the lecture format and a Review of some graphing principles

Right mouse click to advance, or Use the arrow keys to navigate in the presentation : the up or right arrow to advance, the down or left arrow to go back;

The image of the house appears on every slide in the upper left and operates as a hyper link to the slide “Lecture Outline”

Tips for Navigation in the presentation:

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Lecture OutlineFirst slideIntroduction to the lecture formatReview of GraphingSlopes of Straight LinesFour Benchmarks of Straight Lines & Slopes

Distance Traveled & Time

Slope and Marginal AnalysisShifting the lineCurved Lines (Micro Class Only)

To advance through the presentation you can mouse click to the next slide, or click any of the above hyperlinks.

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Three Delivery FormatsTRADITIONAL face to face lecturesONLINE lectures anytime, anywhere

BLENDED:

Online LecturesTA led face to face discussion section

What we strive to achieve…

Be PreparedEndeavorParticipateRespect Others

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Data: Age, Education, and Pay

Outline Ch 12

Age Earning Profiles By Level of Education

A College Degree leads to a dramatically higher earnings level than a high school graduate

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Does Education Pay off?Tara Kalwarski, Business Week Sept. 2009 September , writes:Going to school pays off, and earnings for U.S. adults with college degrees have held up well during the downturn. That might explain why more people are getting higher degrees than ever before. Nevertheless, a surprisingly large number of Americans lack even a high school diploma.

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Course Goal

Skill of explaining economic concepts on the back of a drink coasterTry explaining the benefit of education by contrasting the age earning profiles of individuals with the highest educational attainment of a BA and a high school diploma. The next slide shows an example.

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Age-earnings Profile by education on a napkin

The graph above contrasts the outcomesClick here for the Graphing review, or Click here to return to the lecture outline

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Review of Graphing

A quick review of graphing basis we have the following 3 slides:1. What is a graph2. Basics of a graph3. Example of a Graph

Click the topic to begin the review of the next 3 slides (it is hyperlinked), or Click here to skip ahead to the next topic: Slope

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What is a graph?

It is a picture showing how two variables relate

It conveys information in a compact and efficient way

It shows the functional or casual relation that exists between two variables when the value of one variable depends on another

It shows how the value of the dependent variable on the vertical axis depends on the value of the independent variable on the horizontal axis

Click here to return to menu of review of graphing

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Basics of a GraphThe value of variable x, measured along the horizontal axis, increases as you move to the right of the origin.

The value of the variable y, measured along the vertical axis, increases as you move upward.

Any point on a graph represents a combination of particular values of two variables.

For example, point a represents the combination of 5 units of variable x and 15 units of variable y, while point b represents 10 units of x and 5 units of y.

y

20

15

10

5

0

Ver

tica

l axi

s

O rigin 5 10 15 20 x

a

b

Horizontal axis

Click here to return to menu of review of graphing

Hours Distance Driven Traveled Per Per Day Day (miles) (x) (y)a 1 50

b 2 100

c 3 150

d 4 200

e 5 250

1 2 3 4 5Hours driven per day

Dis

tan

ce t

rave

led

per

day

(m

iles)

250

200

150

100

50

0

a

b

c

d

e

Example: Relating Distance Traveled to Hours DrivenThe data in the left side table is plotted in the graph on the right.

Click here to return to menu of review of graphing

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Slopes of Straight LinesThe Slope indicates:

how much the vertical variable changes for a given change in the horizontal variable

The formula for Slope is: Change in the vertical distance / change in the horizontal distance, or expressed more commonly asrise over run

Slope of straight line is the same everywhere along the line

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Four Benchmark ExamplesFour benchmark examples:

Positive slopeNegative slopeHorizontalVertical

To view each example, click the example (they are hyperlinked to the corresponding slide), or

Click here to advance to the next topic: “Slope and Marginal Analysis”

Slopes for Straight Lines: Positive

y

20

15

10

010 20 x

5

10

Slope 0.5= =5 10

8a.) Positive relation

Click here to return to menu of slope examples

Slopes for Straight Lines: Negative

y

20

10

3

0 10

–7

10 20 x

Slope – – 0.7= =7 10

8b.) Negative relation

Click here to return to menu of slope examples

Slopes for Straight Lines: Zero

10 20 x

y

20

10

0

Slope 0= =0

10

10

8c.) No relation: zero slope

Click here to return to menu of slope examples

Slopes for Straight Lines: Infinite

10 x

y

20

10

0

10 0

10

Slope = =

8d.) No relation: infinite slope

Click here to return to menu of slope examples

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Slope and Marginal Analysis

Economic analysis usually involves marginal analysis

The slope is a convenient device for measuring marginal effects because it reflects the change in one variable – the cause -- compared to the change in some other variable – the effect

Click here to return to menu of slope examples

1 2 3 4 5Hours driven per day

Dis

tan

ce t

rav

ele

d p

er

day

(m

iles

)

250

200

150

100

50

0

d

T

f

T'

An increase in average speed (from point f) increases the distance traveled for every hour driven (to point h).

Shift in Curve Relating Distance Traveled to Hours Driven

h

Or to say the same thing in other words: An increase in average speed (from point f) reduces the numbers of hours to drive the same distance (to point d).

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Curved Lines (Micro class only)

Indifference CurvesFor analysis of consumer behavior

Revenue and Cost CurvesFor analysis of firm behavior

Click a topic, or click here to continue to the end of the presentation

y

40

30

20

10

0

10 20 30 40 x

bB

B

a

A

A

Slope of curved line varies at different points along curve

Draw a straight line that justtouches the curve at a point but does not cut or cross the curve – tangent to the curve at that point

Slope of the tangent at thatpoint is the slope of the curve at that point

With line AA tangent to the curve at point a, the horizontal value increases from 0 to 10 while the vertical value falls from 40 to 0 therefore the slope of the tangent at point “a” is “-4”

MICRO Class Only Slopes at Different Points on a Curved Line

y

x

b

aThe hill-shaped curve begins with a positive slope to the left of point a, a slope of 0 at point a, and a negative slope to the right of point a.

The U-shaped curve begins with a negative slope, has a slope of 0 at point b, and a positive slope after point b.

MICRO Class Only Curves with Both Positive and Negative Ranges

END OF PRESENTATION