Economic graph

The social science of economics makes extensive use graphs to better illustrate the economic principles and trends it is attempting to explain. Those graphs have specific qualities that are not often found (or are not often found in such combinations) in other sciences.

The supply and demand model describes how prices vary as a result of a balance between product availability and demand. The graph depicts an increase (that is, right-shift) in demand from D₁ to D₂ along with the consequent increase in price and quantity required to reach a new equilibrium point on the supply curve (S).

A common and specific example is the Supply and Demand graph shown at right. This graph shows supply and demand as opposing curves, and the intersection between those curves determines the price point. An alteration of either supply or demand is shown by displacing the curve towards or away the zero-line of the graph's X or Y coordinates, and once this is done, the illustrated price points (P) and matching quantity (Q) are altered (in the shown example, from P1 to P2 and from Q1 to Q2).

Economic graphs frequently present only in the first quadrant of the Cartesian plane. Even though the axes refer to numeric variables, specific values are seldom introduced. The economic analysis under discussion deals with forces peculiar to the field of economics, and generally stops short of use of hyperbolic coordinates.

More generally, there is usually some underlying mathematical model which underlies any given economic graph. For instance, the commonly found supply and demand graph has its underpinnings in general price theory - a highly mathematical discipline.