Some Mathematical Tools Used In Economics

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The main mathematical tools are slope of a straight line and equation of a straight line. These tools help in understanding relationships between two variables in economics.

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Graphic representation of a functional relationship between two variables is called a curve. A curve can be a straight line, convex, or concave depending upon the behaviour of slope.

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Slope is the ratio of change in Y to change in X between two points of a curve. It is written as Slope = Change in Y / Change in X = ΔY/ΔX. Here Y is the dependent variable and X is the independent va…

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No. The definition of slope applies to all types of curves, whether straight, convex, or concave. For a straight line, the slope remains unchanged all along the line.

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If the coordinates of two points are (X1, Y1) and (X2, Y2), then slope is m = (Y2 - Y1)/(X2 - X1) = Vertical difference / Horizontal difference.

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For a downward sloping line, slope = ΔY/ΔX = -AE/EB = -8/2 = -4. This negative value shows that when X rises by 1 unit, Y reduces by 4 units.

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The minus sign attached to the value of slope indicates that there is negative functional relation between X and Y. A negative slope means that when one variable rises, the other falls.

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For an upward sloping line, slope = +BC/+AC = +8/+2 = +4. The plus sign indicates a positive relation between X and Y.