Histogram Concept
QRB Concepts – Plotting Bivariate data
Concept: Construct histograms and bivariate plots using Excel.
Reading Reference: Topic 2 of Sevilla & Somers and Ch. 4 of Lind, Marchal, & Wathen
Example of Application
Bivariate Plots: Economics: We often need to plot a demand curve to illustrate levels of quantity demanded based on the price of a product. Bivariate plots can be used to project future sales based on pricing or to determine if a price is too high or low. People typically buy more of a product if the price of the product is less, indicating an inverse relationship between price and quantity demanded. Due to the law of marginal utility, however, people buy less of a product as their need for the product becomes satiated which means that the price has to be progressively reduced (McConnell & Brue, p. 40). Therefore, it is typical that a demand curve is nonlinear. Once a few data points are obtained from trial, market studies, or industry information, a bivariate (two sets of data) plot can be drawn that reflects the demand curve for a particular product. Using Excel, the data can be entered in a spreadsheet and plotted. The independent (x) variable is typically plotted on the horizontal axis and the dependent (y) variable is plotted on the vertical axis. When plotting a demand curve, economists always place the quantity demanded on the horizontal axis and the price on the vertical axis. Below is an individual’s demand for corn.
Bushels Price
|20 | $ 6.00 |
|40 | $ 5.00 |
|70 | $ 4.00 |
|110 | $ 3.00 |
|160 | $ 2.00 |
How the Math Connects to the Concept
To plot this data into a scatter plot, enter the data on an Excel spreadsheet, as shown below (Figure 1). The quantity demanded is entered in the first column (A1) because it represents the independent variable. The price is entered in the second column (B1). Highlight the data by
Concept: Construct histograms and bivariate plots using Excel.
Reading Reference: Topic 2 of Sevilla & Somers and Ch. 4 of Lind, Marchal, & Wathen
Example of Application
Bivariate Plots: Economics: We often need to plot a demand curve to illustrate levels of quantity demanded based on the price of a product. Bivariate plots can be used to project future sales based on pricing or to determine if a price is too high or low. People typically buy more of a product if the price of the product is less, indicating an inverse relationship between price and quantity demanded. Due to the law of marginal utility, however, people buy less of a product as their need for the product becomes satiated which means that the price has to be progressively reduced (McConnell & Brue, p. 40). Therefore, it is typical that a demand curve is nonlinear. Once a few data points are obtained from trial, market studies, or industry information, a bivariate (two sets of data) plot can be drawn that reflects the demand curve for a particular product. Using Excel, the data can be entered in a spreadsheet and plotted. The independent (x) variable is typically plotted on the horizontal axis and the dependent (y) variable is plotted on the vertical axis. When plotting a demand curve, economists always place the quantity demanded on the horizontal axis and the price on the vertical axis. Below is an individual’s demand for corn.
Bushels Price
|20 | $ 6.00 |
|40 | $ 5.00 |
|70 | $ 4.00 |
|110 | $ 3.00 |
|160 | $ 2.00 |
How the Math Connects to the Concept
To plot this data into a scatter plot, enter the data on an Excel spreadsheet, as shown below (Figure 1). The quantity demanded is entered in the first column (A1) because it represents the independent variable. The price is entered in the second column (B1). Highlight the data by