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Analyzing Growth Rates with Appropriate Chart Scales
An investment analyst is comparing the performance of two companies. Company A's stock price grew from $10 to $20 in its first year of operation, and from $100 to $110 in its fifth year. Company B's stock price grew from $10 to $20 in its first year, and from $100 to $200 in its fifth year. An investor wants to visualize which company has a more consistent percentage growth rate. If you were to plot this data on a chart, what type of scale should you use for the vertical (price) axis to best answer the investor's question? Justify your choice by explaining what the resulting graph would show for each company.
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A graph plots the cost of a product on its vertical axis against the cumulative production volume on its horizontal axis. The graph uses a special scale where moving one major gridline to the right on the horizontal axis represents a tenfold increase in production volume, and moving one major gridline down on the vertical axis represents the cost being halved. The data on the graph forms a consistent, straight, downward-sloping line. If the cost is $100 per unit when cumulative production is 1,000 units, what is the predicted cost per unit when cumulative production reaches 100,000 units?
Choosing the Appropriate Scale for Data Visualization
A graph displays a company's revenue over a 10-year period. The vertical axis uses a ratio scale where each major gridline represents a doubling of revenue (e.g., $1M, $2M, $4M, $8M). The horizontal axis is a standard linear scale representing years. If the data points for the company's revenue form a straight, upward-sloping line on this graph, what can be concluded about the company's revenue growth?
Interpreting Rate of Change on a Ratio Scale
Analyzing Growth Rates with Appropriate Chart Scales
An analyst is tracking the market adoption of a new technology. The data shows that the number of users is doubling approximately every six months. The analyst wants to create a chart that most clearly illustrates whether this constant rate of growth is being maintained over several years. Which of the following chart configurations would be the most effective for this specific purpose?
A graph plots the cost per unit for two different technologies, A and B, over a ten-year period. The vertical axis uses a ratio scale, where each major gridline represents a halving of the cost (e.g., $100, $50, $25). Both technologies are represented by straight, downward-sloping lines, but the line for Technology A is steeper than the line for Technology B. What can be concluded by comparing the two lines?
On a graph where the vertical axis uses a ratio scale (e.g., each major gridline represents a halving of the value), a straight, downward-sloping line indicates that the variable being measured is decreasing by the same absolute amount in each time period.
Interpreting Data on Different Scales
An analyst is creating charts to visualize different data trends over time. The charts all use a standard linear scale for the horizontal (time) axis, but a ratio (logarithmic) scale for the vertical axis. Match each described data trend with how it would appear as a line on this specific type of chart.
Interpreting Rate of Change on a Ratio Scale