One reason to attend college is that a bachelor’s degree provides access to higher-paying jobs. Additional degrees, such as MBAs or law degrees, increase earnings even more. If you were to read an article about the relationship between educational attainment and income, you would probably see a graph showing the income levels for workers with different levels of education. This graph would depict the idea that, in general, having more education increases a person’s income. This graph, like most graphs in economics, would depict the relationship between two economic variables. A variable is a measure that can take on more than one value, such as the number of years of education a person has, the price of a can of soda, or a household’s income.

As you learned in this section, economic analysis relies heavily on models, simplified representations of real situations. Most economic models describe the relationship between two variables, simplified by holding constant other variables that may affect the relationship. For example, an economic model might describe the relationship between the price of a can of soda and the number of cans of soda that consumers will buy, assuming that everything else that affects consumers’ purchases of soda stays constant. This type of model can be depicted mathematically, but illustrating the relationship in a graph makes it easier to understand. Next we show how graphs that depict economic models are constructed and interpreted.