When we compute the slope of a curve between two points, we are really computing the slope of a straight line drawn between those two points.
Another is to compute the slope of the curve at a single point. One is to consider two points on the curve and to compute the slope between those two points. We can deal with this problem in two ways. How can we estimate the slope of a nonlinear curve? After all, the slope of such a curve changes as we travel along it. But we also see that the curve becomes flatter as we travel up and to the right along it it is nonlinear and describes a nonlinear relationship. Inspecting the curve for loaves of bread produced, we see that it is upward sloping, suggesting a positive relationship between the number of bakers and the output of bread. This is a nonlinear relationship the curve connecting these points in Panel (c) (Loaves of bread produced) has a changing slope. This information is plotted in Panel (b). The table in Panel (a) shows the relationship between the number of bakers Felicia Alvarez employs per day and the number of loaves of bread produced per day. Instead, we shall have to draw a nonlinear curve like the one shown in Panel (c). Clearly, we cannot draw a straight line through these points. The corresponding points are plotted in Panel (b). The relationship she has recorded is given in the table in Panel (a) of Figure 21.9 “A Nonlinear Curve”. Suppose Felicia Alvarez, the owner of a bakery, has recorded the relationship between her firm’s daily output of bread and the number of bakers she employs. A nonlinear curve is a curve whose slope changes as the value of one of the variables changes.Ĭonsider an example. A nonlinear relationship between two variables is one for which the slope of the curve showing the relationship changes as the value of one of the variables changes. Many relationships in economics are nonlinear.
The slopes of the curves describing the relationships we have been discussing were constant the relationships were linear. The cancellation of one more game in the 1998–1999 basketball season would always reduce Shaquille O’Neal’s earnings by $210,000. When we add a passenger riding the ski bus, the ski club’s revenues always rise by the price of a ticket. In the graphs we have examined so far, adding a unit to the independent variable on the horizontal axis always has the same effect on the dependent variable on the vertical axis.
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