Graphs in Economics Study Notes

Diagrams and Graphs in Economics

Introduction to Diagrams and Graphs

• Diagram: A visual representation of data using pictures. Diagrams are self-explanatory and do not require prior statistical knowledge.
• Graph: A visual representation of data using pictures. Graphs require a detailed knowledge of statistics for interpretation.

Importance of Diagrams and Graphs in Economics

• Ease of Understanding: Diagrams and graphs simplify the study of economics.
• Trend Identification: They aid in understanding economic trends.
• Sectoral Analysis: Changes within various sectors can be easily understood.
• Data Comparison: Facilitates comparison of data across different time periods.
• Time Efficiency: Helps readers understand data quickly and with less effort.
• Principle Simplification: Complex economic principles become easier to grasp.

Aspects to Consider When Constructing Diagrams or Graphs

• Choice of Diagram/Graph: Select the most effective type for the data.
• Clarity: Ensure the picture is neat and clear.
• Scale: Use appropriate sizes and scales.
• Axes: Clearly denote both axes.
• Data Table and Source: Include the data table and source.
• Calculation Method: Mention the method of data calculation.

Types of Diagrams

1. Pictogram
2. Bar Diagram
3. Pie Diagram
4. Circle Diagram
5. Line Diagram
6. Scatter Diagram

Line Diagram

• A line diagram shows the shape or slope of a relationship between two variables in economics. Examples include demand curves and supply curves.

Bar Diagram

• A bar diagram visually represents data using rectangular bars and is also known as a bar chart or bar graph.
  • Simple bar diagram
  • Cluster bar diagram
  • Divided bar diagram

Simple Bar Diagram

• Represents data with one variable, using bars of equal width but varying length.

Cluster Bar Diagram

• Displays multiple sets of data side-by-side.

Divided Bar Diagram

• Represents data by dividing each bar into segments.

Aspects of Bar Diagrams

• Width: All bars should have equal width.
• Length: The length of the bar should be proportional to the value of the variable.
• Distance: The distance between all bars should be equal.
• Base: All bars should lie on the same base (x-axis).
• Arrangement: Vertical bars should be arranged from left to right in order of the data series.

Pie Diagram

• A pie diagram represents data as divisions of a circle in degrees. An entire circle represents $360^{\circ}$.

• Degree Calculation:
  $\text{Degree} = \frac{\text{Component value}}{\text{Total value}} \times 360$

• If data is compared between different time periods, two pie diagrams can be drawn side by side.

Technology in Economics

• Digital technology is used for various purposes, including education. Different types of digital tools used in the study of economics are explained.

Digital Tools

1. Presentation: Complicated economic information/data can be made easier by expressing it in a PowerPoint presentation.
2. Excel Work Sheets: Economics deals with lots of data. Such data must be entered in an excel sheet, and this sheet can process the data for any formula with just one click. It can give us sum total, averages, etc.
3. Diagrams and Graphs: There are many programs in a computer that help us to draw diagrams and graphs. There are simple drawing tools in a word file, which can be used to draw demand curves, supply curves, etc.
4. Storage Tools: We use lots of study material in economics, such materials are very important, so it must be stored for a longer period of time. Google Drive, digi-locker, etc., are some tools which help to store and protect our data.
5. Other Tools: SPSS, SHAZAM, E-views, SAS, etc., are some tools that help with data processing. Research institutes buy such programs and use them as per their needs.

Cautions in Using Computer Technology

• A computer is a tool for study, and it is not a study material by itself.
• It helps to make the process of study easier and faster, but it does not replace the process of studying.
• If we do not use the right command in a computer, we may lose our data.
• We must use the correct formula to get an accurate answer.

Internet Technology

• Internet is another facility created by digital technology, which helps to study economics.

Internet Technology Uses

1. Tutorials: Some educational websites put PowerPoint presentations and study material on open access links.
2. Active learning: Some videos of lectures by experts are put on access sites by some educational institutions. Some institutions create live lectures for students.
3. Reading Materials: Numerous books are available online free of cost for reading. Some good research articles, copies of journals, etc., are also available for reading (e-books, e-journals, etc.).
4. Information: By one simple click, we can get information regarding economics degrees or any other information about any subject.
5. Data: Economics uses a lot of secondary data for e.g., budget of a government, the value of exports and imports, employment data, etc. We can get these data on the internet easily.

Internet Technology (Cautions)

• Like computers, the internet is also a tool.
• It cannot replace books and teachers or our own thinking.
• A lot of substandard material, irrelevant information, and misleading information are found on the internet.
• We must be careful while using the internet and must avoid using those.
• Only authentic websites must be referred to.

Data CDs

• Some authorities and agencies like laboratories, research centers, government agencies, etc., collect and publish the data. They store data using compact discs.
• Data CDs frequently used in economics are:
  • CD of Census of India
  • CD of NSSO
  • CD of Annual Survey of industries in India.
  • CD of national income Accounts of India.

Data CDs Difficulty

• Since the data CDs contain a huge size of data, it becomes difficult to use.
• One must have the knowledge regarding searching the relevant data.