Linear Modelling
Theory
A linear model uses the equation
A linear model is an equation of the form
There are three core skills with linear models:
- Build a model from a description, two readings, or a graph.
- Use the model by substituting a value of
(or ) and solving. - Interpret the slope and intercept in the real-world context.
When two plans meet at the same cost, this is called a break-even point. Set the two cost expressions equal and solve. When the slope is negative, the quantity is decreasing — common in depreciation, water draining and fuel burning.
The first diagram shows a typical linear model: a fixed monthly fee plus a per-minute rate. The intercept is the joining fee and the slope is the rate. The second shows two competing plans meeting at a break-even point — the usage at which both plans cost the same.
A linear model uses the standard form:
For break-even between two plans
Interpreting and in context
| Situation | Slope | Intercept |
|---|---|---|
| Cost vs. months | $ per month | joining fee / setup |
| Distance vs. time | speed (km/h) | starting distance |
| Water bill vs. usage | $ per kL | fixed monthly fee |
| Asset value vs. years | $ per year (negative for depreciation) | purchase price |
How to work with a linear model
- Identify what each variable represents (with units) and what's being asked.
- Build or use the model. To build from two readings, treat each as a point and use the gradient formula then point-slope form. To use the model, substitute the known value and solve for the unknown.
- Interpret the answer in context. Include units, and check the answer is reasonable for the situation.
Set up the model with
Substitute
For
Use the points
Substitute
The tree grows at
Set the two cost expressions equal and solve.
At
The slope
The model predicts the laptop reaches zero value after
Common pitfalls
Frequently asked questions
What is a linear model?
A linear model is an equation of the form y equals m x plus c used to describe a real-world situation where one quantity changes at a constant rate with respect to another. The slope m is the rate of change and the y-intercept c is the starting value.
What does the slope mean in a linear model?
The slope is the rate of change in real-world units. For cost versus months, it is dollars per month. For distance versus time, it is speed. For asset value over years, a negative slope is the rate of depreciation in dollars per year.
What does the y-intercept mean in a linear model?
The y-intercept c is the value of the dependent variable when x equals 0 — the starting point. It might be the joining fee, the fixed monthly charge, the purchase price of an asset, or the starting distance.
What is a break-even point and how do I find it?
A break-even point is the value of x at which two cost (or revenue) plans are equal. Set the two cost expressions equal to each other and solve for x. Then substitute back into either model to find the matching cost.
How do I build a linear model from two data points?
Treat each piece of data as an ordered pair. Find the slope using m equals (y2 minus y1) divided by (x2 minus x1), then substitute the slope and either point into the point-slope form y minus y1 equals m times (x minus x1) and rearrange.
When is a linear model not appropriate?
Linear models assume a constant rate of change. They work well in the short term but become unrealistic over time. A tree does not keep growing 10 cm per month forever, and a car's value cannot drop below zero. Always check the model is reasonable for the input value.
Practice Questions
10 questions available.
Practice Questions