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they can seem like an abstract mathematical technique. We are introduced to equations such as x(t) and y(t)
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the consumer's chosen combination moves from one point to another. The resulting path can be viewed as a parametric curve. The important insight The parameter is not necessarily time. Here
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we describe both x and y in terms of another variable. That variable—the parameter—allows us to describe not only where a system is
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which tells us how quickly y is changing. In the pumpkin example
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the investor changes their portfolio allocation. As the allocation changes
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time determines the pumpkin's horizontal and vertical position. In economics
t = 3 gives another
the corresponding risk and expected return change. Mathematically
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time can determine how advertising expenditure and sales evolve together. In finance
usually represented by t. For example: x(t) = 2t y(t) = t² Here
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t = 2 gives one point
y(t)) where t is time. Its horizontal position might be: x(t) = 0.5t and its vertical position: y(t) = 90 + 0.2t − 4.9t² At each moment
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we get a particular combination of coffee and tea. For example: Price of coffee
t is the parameter. Let's see what happens as t changes. t
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these represent velocity components. But in business
y(t)
x(t)
two marketing campaigns might eventually reach the same advertising expenditure and sales values
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