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Thread: interpret the slope

  1. #1
    New Member
    Join Date
    Aug 2005

    interpret the slope

    how do you interpret the slope and y intercept in a real world case?

  2. #2
    Elite Member stapel's Avatar
    Join Date
    Feb 2004
    Um... wouldn't that sort of depend on what the case was? Or are you referring just in general to "starting value" and "rate of change"?


  3. #3
    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


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