interpret the slope
- Thread starter ggrove
- Start date
G
Guest
Guest
A real case of how to view slope and y intercept is to consider the following:
In a business where you have a graph of $profit vs production volume, the y intercept is occuring when production volume is zero. This is your fixed costs ie the cost of renting a building etc.(ie a negative profit)
The slope is a relationship between how costs are changing with volume or better shown as slope = $profit/volume
This can be used to make simple decisions on the impact of changing volume ---more volume does not always equal more profit.
The x intercept is the point at which you are no longing losing money (in the simple world)...
Hope this helps
In a business where you have a graph of $profit vs production volume, the y intercept is occuring when production volume is zero. This is your fixed costs ie the cost of renting a building etc.(ie a negative profit)
The slope is a relationship between how costs are changing with volume or better shown as slope = $profit/volume
This can be used to make simple decisions on the impact of changing volume ---more volume does not always equal more profit.
The x intercept is the point at which you are no longing losing money (in the simple world)...
Hope this helps