CAS EC 101
Introductory Microeconomic Analysis
Midterm Exam 1
2024
Graphing
● Purposes
○ Express a complex idea in a simple way
○ Summarize info
● Types of graphs
○ Dependent on the information given
■ Unidimensional data (single variable)
● Pie charts (not the best choice of graph)
○ Imagine a pie chart showing the percentage of men and
women in the tech industry
■ The variable there is gender
● Bar charts
○ Variables of interest (what you want to see the changes
in) go on the Y axis
○ Distinct groups go on the X axis
○ Imagine a bar chart with average income taxes paid on
the y axis. On the X axis will be the different income
brackets
● Time Series
○ Easy to be confused as two dimensional data
○ Variable of interest will go on the Y axis
○ X axis will be for time (ie. different years)
○ Imagine a time series graph in which the real value of
minimum wage will go on the y axis and the different
years will go on the x axis
○ Label your axes to avoid confusion in interpretation
■ Two dimensional data (relationships between variables)
● Scatterplot
, ○ X axis will have the explanatory variable (the cause)
○ Y axis will have the response variable (the reaction)
○ Positive correlation: variables tend to move in the same
direction
■ An increase in x, leads to an increase in y
○ Negative correlation: variables move in different
directions
■ An increase in x, leads to a decrease in y
○ Correlation does NOT imply causation
■ Imagine a scatter plot that’s comparing height
and SAT scores
● Not a valid graph because the variables
are not related and don’t take into
consideration other factors like age
■ Three dimensions
● Imagine a graph showing the relationship between income (z
axis), price (y axis), and quantity purchased (x axis)
○ This is difficult to understand when drawn as a 3D graph
○ in order to simplify this, we need to go back to 2
dimensions
■ Put price on the y axis, quantity on the x axis, and
a demand curve within the coordinate plane
● Income would affect the the graph by
shifting the demand curve either up or
down
○ As a general rule of thumb, any
variable that isn’t on the graph, will
cause a shift of the demand curve
○ If the variables outside the graph
are held constant, and something
on either the x or y axis is changed,
there will be a shift along the
demand curve
● Slope
○ Summarize the relationship between 2 variables
○ Defined as rise/run, or the change in y divided by the change in x
■ Y2-y1 / x2-x1
○ The ultimate goal of most research is causal interpretation
■ ”X causes Y”
■ For example with slope M: if I increase X by 1 unit, y increases by M
○ Reverse Causality:
■ Imagine a scatterplot with minimum wage on the x axis and
employment on the y axis
, ● Thinking about the effect of employment on minimum wage is
reverse causality
○ A country with high employment, can afford a high
minimum wage
Introductory Microeconomic Analysis
Midterm Exam 1
2024
Graphing
● Purposes
○ Express a complex idea in a simple way
○ Summarize info
● Types of graphs
○ Dependent on the information given
■ Unidimensional data (single variable)
● Pie charts (not the best choice of graph)
○ Imagine a pie chart showing the percentage of men and
women in the tech industry
■ The variable there is gender
● Bar charts
○ Variables of interest (what you want to see the changes
in) go on the Y axis
○ Distinct groups go on the X axis
○ Imagine a bar chart with average income taxes paid on
the y axis. On the X axis will be the different income
brackets
● Time Series
○ Easy to be confused as two dimensional data
○ Variable of interest will go on the Y axis
○ X axis will be for time (ie. different years)
○ Imagine a time series graph in which the real value of
minimum wage will go on the y axis and the different
years will go on the x axis
○ Label your axes to avoid confusion in interpretation
■ Two dimensional data (relationships between variables)
● Scatterplot
, ○ X axis will have the explanatory variable (the cause)
○ Y axis will have the response variable (the reaction)
○ Positive correlation: variables tend to move in the same
direction
■ An increase in x, leads to an increase in y
○ Negative correlation: variables move in different
directions
■ An increase in x, leads to a decrease in y
○ Correlation does NOT imply causation
■ Imagine a scatter plot that’s comparing height
and SAT scores
● Not a valid graph because the variables
are not related and don’t take into
consideration other factors like age
■ Three dimensions
● Imagine a graph showing the relationship between income (z
axis), price (y axis), and quantity purchased (x axis)
○ This is difficult to understand when drawn as a 3D graph
○ in order to simplify this, we need to go back to 2
dimensions
■ Put price on the y axis, quantity on the x axis, and
a demand curve within the coordinate plane
● Income would affect the the graph by
shifting the demand curve either up or
down
○ As a general rule of thumb, any
variable that isn’t on the graph, will
cause a shift of the demand curve
○ If the variables outside the graph
are held constant, and something
on either the x or y axis is changed,
there will be a shift along the
demand curve
● Slope
○ Summarize the relationship between 2 variables
○ Defined as rise/run, or the change in y divided by the change in x
■ Y2-y1 / x2-x1
○ The ultimate goal of most research is causal interpretation
■ ”X causes Y”
■ For example with slope M: if I increase X by 1 unit, y increases by M
○ Reverse Causality:
■ Imagine a scatterplot with minimum wage on the x axis and
employment on the y axis
, ● Thinking about the effect of employment on minimum wage is
reverse causality
○ A country with high employment, can afford a high
minimum wage
