Tikz Package For Economists

usepackage{TikZ } for economists
Kevin Goulding
May 2011
P
q
Supply
pe
p
p0
Supply Shift
P (q) = 21 q + 5.25
Pc
P (q) = 21 q + 92
T S
q qe q0
Abstract
This is a short guide on how to use the LaTeX package TikZ to quickly create some
frequently used diagrams common to an undergraduate microeconomics class. Any comments
or questions can be e-mailed directly to kevingoulding@gmail.com with subject heading TikZ
for economists.
Introduction
TikZ is a package that is useful for creating graphics by via coding direclty in your LaTek document.
For example, rather than generating a graphic file (.pdf, .jpg, etc.) and linking to it in your LaTeX
code, you include TikZ code in your LaTeX document that tells your compiler how to draw. There
are several advantages to using TikZ code:
1. Less complicated file structure - all your figures are self-contained within your LaTeX document.
2. Beautiful results, with no loss of resolution when scaled up or down.
3. The ability to change diagrams by referencing variables within TikZ code.
Header
At the very top of you LaTeX document, always include:
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\ usepackage { t i k z }
And, when you would like to begin a new TikZ diagram within your document, start (and
finish it) with this code:
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\ begin { t i k z p i c t u r e }
% e n t e r TikZ code h e r e .
\end{ t i k z p i c t u r e }
A simple example
In this section, we will walk through the creation of the picture in Figure 1 at a high level, just to
let you know in broad terms what is going on in the code shown below.
Starting the Figure
The first line of code (3) tells LaTeX to interpret the following code using the TikZ compiler. Here
you also specify the scale of your image. This image has a scale value of 1.1, representing a 10%
size increase over no scaling. Line 4 invokes a TikZ packages that allows you to calculate relative
coordinate positions (see line 15 for an example of this).
Defining Coordinates
Lines 7-11 define the coordinates we will be using in this image as well as the specific labels we
would like to place next to the coordinates. For example, line 8 says to define a coordinate A
located at the cartesian coordinates (-2.5,2.5) and label the coordinate with a letter A above
the coordinate. Later in the code we will be able to reference this coordinate simply as A.
Notice that all the coordinate labels are surrounded by $, thus invoking LaTeXs math-mode.
All code in math-mode (from the amsmath package) works here for labelling.
Figure 1: A two-node network
electricity
A
GA cheap
1
B
K
GB dear
TikZ code : F i g u r e 1 : A twonode network
\ b e g i n { t i k z p i c t u r e } [ s c a l e =1.1 , t h i c k ]
\ u s e t i k z l i b r a r y { c a l c } %a l l o w s c o o r d i n a t e c a l c u l a t i o n s .
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15
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% Define coordinates .
\ coordinate [ l a b e l=
above : $A$ ] (A) a t ( 2 . 5 , 2 . 5 ) ;

above : $B$ ] (B) a t ( 2 . 5 , 2 . 5 ) ;
above : $ e l e c t r i c i t y $ ] (C) a t ( 0 , 3 . 2 5 ) ;
above : $G A \Rightarrow cheap $ ] (D) a t ( 3 , 1 . 5 ) ;
above : $G B \Rightarrow d e a r $ ] (E) a t ( 3 , 1 . 5 ) ;
% Draw l i n e s and arrows .

\draw (A) (B) ;
\draw[>] ( $ (A) + ( 1 , 0 . 7 5 ) $ ) ( $ (B) +( 1 ,0.75) $ ) ;
\draw [ d e n s e l y d o t t e d ] ( 0 , 2 . 8 ) ( 0 , 2 . 2 ) node [ below ] {$K$ } ;
\draw [ d e n s e l y d o t t e d ] ( 0 . 0 5 , 2 . 8 ) ( 0 . 0 5 , 2 . 2 ) ;
% Color i n c o o r d i n a t e s .
\ f i l l [ p u r p l e ] (A) c i r c l e ( 3 pt ) ;
\ f i l l [ p u r p l e ] (B) c i r c l e ( 3 pt ) ;
Drawing lines and arrows

Lines 14-17 essentially connects the coordinates with lines. Line 14 draws a line from coordinate A
to coordinate B (as defined above). Line 15 calculates two new coordinates relative to coordinates
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A and B, and connects them with an arrowed line by using the command []. The ability to
calculate new coordinates in positions relative to other coordinates is a handy feature available
in TikZ. For example, line 15 draws an (arrowed) line from a coordinate 1 unit to the right
of coordinate A and 0.75 units above coordinate A to a new coordinate one unit to the left of
coordinate B and 0.75 units above. Notice that these relative coordinate calculations need to be
enclosed in $.
Lines 16 and 17 draw the small vertical lines above K in the diagram. Calling densely
dotted changes the look of the line. Other types of lines are dotted, dashed, thick and
several others. Because we called thick in line 4 of code, all these lines are a bit thicker than if
we had not called the command. You can delete the option thick and do a visual comparison.
Coloring Coordinates
Lines 20 & 21 add the little note of color that you see in our diagram the nodes in our network
(coordinates A and B) are both small circles filled in with the color purple. This is accomplished
with the file command. Note that colors other than purple can be invoked; feel free to try any of
the usual colors (e.g. green, blue, orange, etc.). The command circle draws a circle around
coordinate A or B, and (3pt) determines the size of the circle.
A Few Things to Notice

TikZ code differs from LaTeX code in several ways:
1. In TikZ, each line must end in a semicolon.
2. Locations are specified via Cartesian Coordinates. Where is the origin? The origin is
horizontally centered on the page, but its vertical placement depends on the size of the entire
picture. Ideally, the simple example shown above will give you an idea of how far a one-unit
change represents. For example, the horizontal distance between node A and node B in
Figure 1 is 5 units.
3. Similar to LaTeX code, most functions begin with a backward slash.
Defining Parameters
TikZ allows you to define parameter values and subsequently reference those values throughout
your image (or the entire LaTeX) document. This feature enables you to update images quicker
once youve set up your images as manipulations of parameters. The following is the TikZ code
to define a parameter inc and set its value to 50.
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\ def \ i n c {50}
You will now be able to reference inc elsewhere in your figure. For example, the following code
defines two parameters, then uses those parameter values to define a coordinate. In this case, x2
will be located at (0, inc
).
pb
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%D e f i n e p a r a m e t e r s
\ def \ i n c {50}
% parameter i n c s e t = 50
\ def \pa { 1 9 . 5 }
% parameter pa s e t = 1 9 . 5
\ coordinate ( x 2 ) a t ( 0 , { \ i n c /\pb } ) ;
Plotting functions
TikZ allows you to plot functions. For example, see the following code.
\draw [ domain = 0 . 6 : 6 ] p l o t ( \ x , { 1 0 exp (1\x 0.2) +0.3}) ;
The code above plots the following function:

f (x) = 10ex0.2 + 0.3
where x [0.6, 6]
For the most part, functions can be specified using intuitive notation. For best results, install
gnuplot on your computer, and you can access a larger set of functions.
See http://www.texample.net/tikz/examples/tag/gnuplot/ for more of the capabilities of
TikZ coupled with gnuplot.
The following example adds axes and a grid using the grid specification with the draw
function.
f (x)
f (x) = 0.5x
\ b e g i n { t i k z p i c t u r e } [ domain = 0 : 4 ]
% Draw g r i d l i n e s .
\draw [ v e r y t h i n , c o l o r=gray ] ( 0.1 , 1.1) g r i d ( 3 . 9 , 3 . 9 ) ;
% Draw x and f ( x ) a x e s .
\draw[>] ( 0 . 2 , 0 ) ( 4 . 2 , 0 ) node [ r i g h t ] {$ x $ } ;
\draw[>] ( 0 , 1 . 2 ) ( 0 , 4 . 2 ) node [ above ] {$ f ( x ) $ } ;
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% P l o t l i n e w i t h s l o p e = 1/2 , i n t e r c e p t = 1 . 5
\draw [ c o l o r=b l u e ] p l o t ( \ x , { 1 . 5 + 0 . 5 \ x } ) node [ r i g h t ] {$ f ( x ) = 0 . 5 x $ } ;
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Coloring Area
TikZ is capable of shading in areas of your diagram, bounded by coordinate or functions. This
can be achieved by calling the fill function as in the following example:
\ f i l l [ o r a n g e ! 6 0 ] ( 0 , 0 ) ( 0 , 1 ) ( 1 , 1 ) ( 1 , 0 ) c y c l e ;
This colors in a 1x1 square with orange (at 60% opacity). Basically, it will connect the listed
coordinates with straight lines creating an outline that will be shaded in by the chosen color. Note
the command cycle at the end. This closes the loop by connecting the last listed coordinate back
to the first.
You can also bound the area to be shaded by a non-straight line. The following example shades
in the area under a normal distribution bounded by 0 and 4.4:
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% d e f i n e normal d i s t r i b u t i o n f u n c t i o n normaltwo
\ def \ normaltwo {\x , { 4 1 / exp ( ( ( \ x3) 2 ) / 2 ) }}
% Shade orange are a u n d e r n e a t h c u r v e .

\ f i l l [ f i l l =o r a n g e ! 6 0 ] ( 2 . 6 , 0 ) p l o t [ domain = 0 : 4 . 4 ] ( \ normaltwo ) ( 4 . 4 , 0 )
cycle ;
% Draw and l a b e l normal d i s t r i b u t i o n f u n c t i o n

\draw [ dashed , c o l o r=blue , domain = 0 : 6 ] p l o t ( \ normaltwo ) node [ r i g h t ] {$N( \mu, \ sigma 2 )
$};
N (, 2 )
And, here is another example that includes axes and two interior bounds on the shading:
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\ begin { t i k z p i c t u r e }
% d e f i n e normal d i s t r i b u t i o n f u n c t i o n normaltwo
% i n p u t x and y p a r a m e t e r s
\ def \y { 4 . 4 }
\ def \x { 3 . 4 }
% this line calculates f (y)
\ def \ f y {41/ exp ( ( ( \ y3) 2 ) / 2 ) }
\ def \ f x {41/ exp ( ( ( \ x3) 2 ) / 2 ) }
% Shade orange are a u n d e r n e a t h c u r v e .
\ f i l l [ f i l l =o r a n g e ! 6 0 ] ( { \ x } , 0 ) p l o t [ domain={\x } : { \ y } ] ( \ normaltwo ) ( { \ y
} , 0 ) c y c l e ;
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% Draw and l a b e l normal d i s t r i b u t i o n f u n c t i o n

\draw [ c o l o r=blue , domain = 0 : 6 ] p l o t ( \ normaltwo ) node [ r i g h t ] { } ;
% Add dashed l i n e d r o p p i n g down from normal .
\draw [ dashed ] ( { \ y } , { \ f y } ) ( { \ y } , 0 ) node [ below ] {$ y $ } ;
\draw [ dashed ] ( { \ x } , { \ f x } ) ( { \ x } , 0 ) node [ below ] {$ x $ } ;
% O p t i o n a l : Add a x i s l a b e l s
\draw ( . 2 , 2 . 5 ) node [ l e f t ] {$ f Y( u ) $ } ;
\draw ( 3 , . 5 ) node [ below ] {$u $ } ;
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% O p t i o n a l : Add a x e s
\draw[>] ( 0 , 0 ) ( 6 . 2 , 0 ) node [ r i g h t ] { } ;
\draw[>] ( 0 , 0 ) ( 0 , 5 ) node [ above ] { } ;
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fY (u)
Some TikZ diagrams with code

The following diagrams were done in TikZ.
Budget Constraints and Indifference Curves

Figure 2: A Generic Price Change
x2
M
p2
IC2
IC1
x1
1
TikZ code : F i g u r e 2 : A Generic P r i c e Change
\ b e g i n { t i k z p i c t u r e } [ domain =0:5 , r a n g e =4:5 , s c a l e =1, t h i c k ]

\ u s e t i k z l i b r a r y { c a l c } %a l l
%D e f i n e l i n e a r p a r a m e t e r s f o r s u p p l y and demand
\ def \ i n c {50}
%Enter t o t a l income
\ def \pa { 1 9 . 5 }
%P r i c e o f x 1
\ def \pb {10}
%P r i c e o f x 2 .
\ def \panew { 1 0 . 6 }
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\ def \ i c a {\x , { 1 0 / \ x }}
\ def \ i c b {\x , { \ s s l p \ x+\ s i n t }}
\ def \demandtwo {\x , { \ d s l p \ x+\d i n t+\dsh }}
\ def \ supplytwo {\x , { \ s s l p \ x+\ s i n t +\s s h }}
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\ coordinate ( x 1 ) a t ( { \ i n c /\ pa } , 0 ) ;
\ coordinate ( x 1 ) a t ( { \ i n c /\ panew } , 0 ) ;
%Draw axes , and d o t t e d e q u i l i b r i u m l i n e s .
\draw[>] ( 0 , 0 ) ( 6 . 2 , 0 ) node [ r i g h t ] {$ x 1 $ } ;
\draw[>] ( 0 , 0 ) ( 0 , 6 . 2 ) node [ above ] {$ x 2 $ } ;
\draw [ t h i c k ] ( x 1 ) ( x 2 ) node [ l e f t ] {$\ f r a c {M}{p 2 } $ } ;
\draw [ t h i c k ] ( x 1 ) ( x 2 ) ;
\draw [ t h i c k , c o l o r=p u r p l e , domain = 0 . 6 : 6 ] p l o t ( \ x , { 1 0 exp (1\x 0.2) +0.3}) node [
r i g h t ] {IC $ 1 $ } ;
\draw [ t h i c k , c o l o r=p u r p l e , domain = 1 : 6 ] p l o t ( \ x , { 1 0 exp ( 0.8\ x ) +1}) node [ r i g h t ]
{IC $ 2 $ } ;
\draw [ d o t t e d ] ( 1 . 5 , 2 ) ( 1 . 5 , 0 ) ;
\draw [ d o t t e d ] ( 2 . 5 , 2 . 3 5 ) ( 2 . 5 , 0 ) ;
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TikZ code : F i g u r e 3 : A Budget c o n s t r a i n t t h a t has a

voucher f o r x 1
\ b e g i n { t i k z p i c t u r e } [ domain =0:5 , r a n g e =4:5 , s c a l e =1, t h i c k ]
\ def \ i n c {62}
\ def \pa { 1 9 . 5 }
%P r i c e o f x 1
\ def \pb {10}
\ def \panew { 1 0 . 6 }
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\ def \ i c a {\x , { 2 / \ x20}}

\ def \ i c b {\x , { \ s s l p \ x+\ s i n t }}
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\ def \ bcv {\x ,{( \ pa ) / ( \ pb ) \ x+(\ i n c ) / ( \ pb ) }}
Figure 3: A Budget constraint that has a voucher for x1

x2
voucher
Indiff. Curve
Budget Constraint
x1
\ def \ bcx {\x , { ( 5 ) /\ x }}

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\draw[>] ( 0 , 0 ) ( 6 . 2 , 0 ) node [ r i g h t ] {$ x 1 $ } ;
\draw[>] ( 0 , 0 ) ( 0 , 6 . 2 ) node [ above ] {$ x 2 $ } ;
\draw [ dashed ] ( 1 . 2 , 3 . 9 ) ( 0 , 3 . 9 ) node [ l e f t ] { voucher } ;
\draw [ t h i c k , domain = 1 . 2 : \ i n c /\ pa ] p l o t ( \ bcv ) node [ below ] { Budget C o n s t r a i n t } ;
\draw [ t h i c k , c o l o r=p u r p l e , domain = 1 : 5 ] p l o t ( \ bcx ) node [ below ] { I n d i f f . Curve } ;
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Income & Substitution Effects

Figure 4: A decrease in the price of x1 by one-fourth
x2
BC2
M
p2
BC1
e2
e1
e01
IC2
IC1
x1
Substitution Effect
Income Effect
Total Effect
TikZ code : F i g u r e 4 : A d e c r e a s e i n t h e p r i c e o f x 1 by
onef o u r t h
\ b e g i n { t i k z p i c t u r e } [ domain =0:100 , r a n g e =0:200 , s c a l e =0.4 , t h i c k , f o n t =\ s c r i p t s i z e ]

\ def \ i n c {10}
\ def \pa {1}
%P r i c e o f x 1
\ def \pb {1}
\ def \panew { 0 . 2 5 }
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%\ d e f \ i c a {\ x , { 1 0 / \ x }}
%\ d e f \ i c b {\ x , { \ s s l p \ x+\ s i n t }}
%\ d e f \ demandtwo {\ x , { \ d s l p \ x+\ d i n t +\dsh }}
%\ d e f \ s u p p l y t w o {\ x , { \ s s l p \ x+\ s i n t +\s s h }}
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\ coordinate [ l a b e l= r i g h t : $ e 1 $ ] ( p 1 ) a t ( 5 , 5 ) ;
\ coordinate [ l a b e l= above : $ e 1 $ ] ( p 2 ) a t ( 1 0 , 2 . 5 ) ;
\ coordinate [ l a b e l= above : $ e 2 $ ] ( p 3 ) a t ( 2 0 , 5 ) ;
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\draw[>] ( 0 , 0 ) ( 4 2 , 0 ) node [ r i g h t ] {$ x 1 $ } ;
\draw[>] ( 0 , 0 ) ( 0 , 1 2 ) node [ above ] {$ x 2 $ } ;
\draw [ t h i c k ] ( x 1 ) ( x 2 ) ;
%
\ draw [ t h i c k , c o l o r=p u r p l e , domain = 0 . 6 : 1 0 0 ] p l o t (\ x , { 1 5 exp (\ x ) }) node [ r i g h t ]
{IC $ 1 $ } ;
%\ draw [ t h i c k , c o l o r=p u r p l e , domain = 0 . 6 : 1 0 0 ] p l o t f u n c t i o n (\ x , { ( 2 5 0 0 ) /(\ x ) }) node [
r i g h t ] {IC $ 1 $ } ;
\draw [ t h i c k , c o l o r=green , domain = 2 : 2 5 ] p l o t ( \ x , { ( 2 5 ) / ( \ x ) } ) node [ r i g h t ] {IC
$ 1$};
\draw [ t h i c k , c o l o r=green , domain = 8 : 3 0 ] p l o t ( \ x , { ( 1 0 0 ) / ( \ x ) } ) node [ r i g h t ] {IC
$ 2$};
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\draw ( 2 , 8 ) node [ l a b e l= below : $BC 1 $ ] { } ;

\draw ( 5 , 1 1 . 5 ) node [ l a b e l= below : $BC 2 $ ] { } ;
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\draw [ d o t t e d ] ( p 2 ) ( 1 0 , 0 ) ;
\draw [ d o t t e d ] ( p 1 ) ( 5 , 0 ) ;
\draw [ d o t t e d ] ( p 3 ) ( 2 0 , 0 ) ;
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\draw [ dashed ] ( 0 , 5 ) ( 2 0 , 0 ) ;
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\draw[<] ( 9 . 8 , 1 ) (5 , 1) node [ l e f t ] { S u b s t i t u t i o n E f f e c t } ;
\draw[>] (10 , 1) (20 , 1) node [ r i g h t ] { Income E f f e c t } ;
\draw[>, d e n s e l y dashed ] (5 , 2) (20 , 2) ;
\draw ( 1 2 . 5 , 2 ) node [ l a b e l= below : T o t a l E f f e c t ] { } ;
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\ f i l l [ b l u e ] ( p 1 ) c i r c l e ( 6 pt ) ;
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TikZ code : F i g u r e 5 : A d e c r e a s e i n t h e p r i c e o f x 1 by
half .
\ b e g i n { t i k z p i c t u r e } [ domain =0:100 , r a n g e =0:200 , s c a l e =0.7 , t h i c k ]

\ usetikzlibrary { calc }
\ def \ i n c {10}
\ def \pa {1}
%P r i c e o f x 1
\ def \pb {1}
\ def \panew { 0 . 5 }
%New p r i c e f o r x 1 .
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Figure 5: A decrease in the price of x1 by half.

x2
M
p2
BC2
BC1
e2
e1
e01
IC2
IC1
x1
Substitution Effect
Income Effect
Total Effect
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\ coordinate [ l a b e l= r i g h t : $ e 1 $ ] ( p 1 ) a t ( 5 , 5 ) ;
\ coordinate [ l a b e l= above : $ e 1 $ ] ( p 2 ) a t ( 7 . 0 7 , 3 . 5 3 ) ;
\ coordinate [ l a b e l= above : $ e 2 $ ] ( p 3 ) a t ( 1 0 , 5 ) ;
\draw[>] ( 0 , 0 ) ( 2 0 . 5 , 0 ) node [ r i g h t ] {$ x 1 $ } ;
\draw[>] ( 0 , 0 ) ( 0 , 1 2 ) node [ above ] {$ x 2 $ } ;
\draw [ t h i c k ] ( x 1 ) ( x 2 ) ;
%Draw i n d i f f e r e n c e c u r v e s
\draw [ t h i c k , c o l o r=green , domain = 2 : 1 8 ] p l o t ( \ x , { ( 2 5 ) / ( \ x ) } ) node [ r i g h t ] {IC
$ 1$};
\draw [ t h i c k , c o l o r=green , domain = 3 . 9 : 1 8 ] p l o t ( \ x , { ( 5 0 ) / ( \ x ) } ) node [ r i g h t ] {IC
$ 2$};
%L a b e l b u d g e t c o n s t r a i n t
\draw ( 2 , 7 . 8 ) node [ l a b e l= below : $BC 1 $ ] { } ;
\draw ( 4 . 5 , 9 . 1 ) node [ l a b e l= below : $BC 2 $ ] { } ;
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%Draw d o t t e d l i n e s
\draw [ d o t t e d ]
showing
( p 2 )
( p 1 )
( p 3 )
quantities .
(7.07 ,0) ;
(5 ,0) ;
(10 ,0) ;
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%L a b e l S u b s t i t u t i o n , Income , and T o t a l e f f e c t s .
\draw [ dashed ] ( 0 , 7 . 0 7 ) ( 1 4 . 1 4 , 0 ) ;
\draw[<] (7 , 1) (5 , 1) node [ l e f t ] { S u b s t i t u t i o n E f f e c t } ;
\draw[>] ( 7 . 0 7 , 1 ) (10 , 1) node [ r i g h t ] { Income E f f e c t } ;
\draw[>, d e n s e l y dashed ] (5 , 2) (10 , 2) ;
\draw ( 7 . 5 , 2 ) node [ l a b e l= below : T o t a l E f f e c t ] { } ;
%C r e a t e p o i n t s where IC t a n g e n t i a l l y i n t e r s e c t s t h e b u d g e t c o n s t r a i n t .
\ f i l l [ b l u e ] ( 7 . 0 7 , 3 . 5 3 ) c i r c l e ( 4 pt ) ;
%
TikZ code : F i g u r e XX: A twonode network
Some Useful Diagrams

Figure 6: A piecewise-defined electricity bid
$
MW
MW
%
TikZ code : F i g u r e 6 : A p i e c e w i s e d e f i n e d e l e c t r i c i t y b i d
\ b e g i n { t i k z p i c t u r e } [ domain =0:5 , s c a l e =1, t h i c k ]

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%D e f i n e b i d q u a n t i t i e s
\ def \ qone {3}
% step 1
\ def \ qtwo {2}
% step 2
\ def \ q t h r e e {1}
% step 3
\ def \ q f o u r { 0 . 5 }
% step 4
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%D e f i n e b i d p r i c e s
\ def \ pone {1}
% step 1
\ def \ptwo {2}
% step 2
\ def \ p t h r e e {4}
% step 3
\ def \ p f o u r { 5 . 5 }
% step 4
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\ coordinate
\ coordinate
\ coordinate
\ coordinate
( l o n e ) a t ( 0 , { \ pone } ) ;
( l t w o ) a t ( { \ qone } , { \ ptwo } ) ;
( l t h r e e ) a t ( { \ qtwo+\qone } , { \ p t h r e e } ) ;
( l f o u r ) a t ( { \ q t h r e e+\qtwo+\qone } , { \ p f o u r } ) ;
\ coordinate
\ coordinate
\ coordinate
\ coordinate
( r o n e ) a t ( { \ qone } , { \ pone } ) ;
( rtwo ) a t ( { \ qtwo+\qone } , { \ ptwo } ) ;
( r t h r e e ) a t ( { \ q t h r e e+\qtwo+\qone } , { \ p t h r e e } ) ;
( r f o u r ) a t ( { \ q f o u r+\q t h r e e+\qtwo+\qone } , { \ p f o u r } ) ;
\ coordinate
\ coordinate
\ coordinate
\ coordinate
( done ) a t ( { \ qone } , 0 ) ;
( dtwo ) a t ( { \ qtwo+\qone } , 0 ) ;
( d t h r e e ) a t ( { \ q t h r e e+\qtwo+\qone } , 0 ) ;
( d f o u r ) a t ( { \ q f o u r+\q t h r e e+\qtwo+\qone } , 0 ) ;
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%Draw a x e s
\draw[>] ( 0 , 0 ) ( 6 . 2 , 0 ) node [ r i g h t ] {$MW$ } ;
\draw[>] ( 0 , 0 ) ( 0 , 6 . 2 ) node [ l e f t ] {$\ f r a c {\$}{MW} $ } ;
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%Draw b i d s t e p s
\draw [ t h i c k
\draw [ t h i c k
\draw [ t h i c k
\draw [ t h i c k
,
,
,
,
c o l o r=b l u e ]
c o l o r=b l u e ]
c o l o r=b l u e ]
c o l o r=b l u e ]
( l o n e ) ( r o n e ) ;
( l t w o ) ( rtwo ) ;
( l t h r e e ) ( r t h r e e ) ;
( l f o u r ) ( r f o u r ) ;
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%Draw dashed l i n e s
\draw [ dashed ] ( l t w o ) ( r o n e ) ;
\draw [ dashed ] ( l t h r e e ) ( rtwo ) ;
\draw [ dashed ] ( l f o u r ) ( r t h r e e ) ;
TikZ code : F i g u r e 7 : The area b e t w e e n two c u r v e s
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Figure 7: The area between two curves

f (
x)
2
2
64th
1
x
\ b e g i n { t i k z p i c t u r e } [ s c a l e =2] %f o n t =\ s c r i p t s i z e ]
%Note : 64 t h p e r c e n t i l e i s 0 . 3 6 s t a n d a r d d e v i a t i o n s t o t h e r i g h t o f mean .
%D e f i n e e q u a t i o n s f o r t h e two normal d i s t r i b u t i o n s .
\ def \ normalone {\x , { 4 1 / exp ( ( ( \ x4) 2 ) / 2 ) }}
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%Shade orange are a

\ f i l l [ f i l l =o r a n g e ! 6 0 ] ( 2 . 6 , 0 ) p l o t [ domain = 2 . 6 : 3 . 4 ] ( \ normaltwo ) ( 3 . 4 , 0 )
c y c l e ;
\ f i l l [ f i l l =w h i t e ] ( 2 . 6 , 0 ) p l o t [ domain = 2 . 6 : 3 . 4 ] ( \ normalone ) ( 3 . 4 , 0 )
cycle ;
%Draw b l u e normal d i s t r i b u t i o n s
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\draw [ t h i c k , c o l o r=blue , domain = 0 : 6 ] p l o t ( \ normalone ) node [ r i g h t ] {$\lambda 1 $ } ;

\draw [ t h i c k , c o l o r=blue , domain = 0 : 5 ] p l o t ( \ normaltwo ) node [ r i g h t ] {$\lambda 2 $ } ;
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%Draw a x e s
\draw[>] ( 0 , 0 ) ( 6 . 2 , 0 ) node [ r i g h t ] {$\ hat{x } $ } ;
\draw[>] ( 0 , 0 ) ( 0 , 6 . 2 ) node [ l e f t ] {$ f ( \ hat{x } ) $ } ;
%D e f i n e c o o r d i n a t e s
\ coordinate ( muone ) a t
\ coordinate ( mutwo ) a t
(4 ,4) ;
(3 ,4) ;
%Draw dashed l i n e s from mean t o xa x i s

\draw [ dashed ] ( muone ) ( 4 , 0 ) node [ below ] {$64{ th } $ } ;
\draw [ dashed ] ( mutwo ) ( 3 , 0 ) node [ below ] {$\mu 2 $ } ;
\draw [ dashed ] ( 2 . 6 , 0 ) p l o t [ domain = 2 . 5 9 : 2 . 6 ] ( \ normaltwo ) node [ l e f t ] {$\phi
$};
\draw [ dashed ] ( 3 . 4 , 0 ) p l o t [ domain = 3 . 3 9 : 3 . 4 ] ( \ normaltwo ) node [ above ] {$+\phi
$};
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Game Theory Diagrams

See below, customizable diagrams for mapping strategic games.
Figure 8: A 22 Strategic form game
Firm B
Right
Left
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54
Top
57
72
Firm A
72
Bot
54
\ b e g i n { t i k z p i c t u r e } [ s c a l e =2] %f o n t =\ s c r i p t s i z e ]
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TikZ code : F i g u r e 8 : A 2 x 2 S t r a t e g i c form game
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% O u t l i n e box
\draw [ t h i c k ]
\draw [ t h i c k ]
\draw [ t h i c k ]
\draw [ t h i c k ]
\draw [ t h i c k ]
\draw [ t h i c k ]
( 0 , 0 ) ( 2 . 2 , 0 ) ;
( 0 , 0 ) ( 0 , 2 . 2 ) ;
( 2 . 2 , 2 . 2 ) ( 2 . 2 , 0 ) ;
( 2 . 2 , 2 . 2 ) ( 0 , 2 . 2 ) ;
( 0 . 3 , 1 . 1 ) ( 2 . 2 , 1 . 1 ) ;
( 1 . 1 , 0 ) ( 1 . 1 , 2 . 5 ) ;
% Payoff d i v i d e r s
\draw [ d e n s e l y d o t t e d ]
( . 1 , 2 . 1 ) ( 1 , 1 . 2 ) ;
( . 1 , 1 ) ( 1 , 0 . 1 ) ;
( 1 . 2 , 1 ) ( 2 . 1 , 0 . 1 ) ;
( 1 . 2 , 2 . 1 ) ( 2 . 1 , 1 . 2 ) ;
% Strategy lab el s
\ coordinate [ l a b e l= l e f t : Top ] ( p 1 ) a t
\ coordinate [ l a b e l= l e f t : Bot ] ( p 1 ) a t
( 0.1 ,1.6) ;
( 0.1 ,0.4) ;
\ coordinate [ l a b e l= above : L e f t ] ( p 1 ) a t ( 0 . 5 5 , 2 . 2 ) ;
\ coordinate [ l a b e l= above : Right ] ( p 1 ) a t ( 1 . 6 5 , 2 . 2 ) ;
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\ coordinate [ l a b e l= above : \ bf {Firm B} ] ( p 1 ) a t ( 1 . 1 , 2 . 5 ) ;

\ coordinate [ l a b e l= l e f t : \ bf {Firm A} ] ( p 1 ) a t ( 0 . 3 , 1 . 1 ) ;
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% The p a y o f f s f o r b o t h p l a y e r s :
\ f i l l [ red ]
( . 3 5 , 1 . 4 ) node { $ 5 7 $ } ;
\ f i l l [ blue ]
( 0 . 8 , 1 . 9 ) node { $ 5 7 $ } ;
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\ f i l l [ red ]
( 1 . 4 , 1 . 4 ) node { $ 7 2 $ } ;
\ f i l l [ blue ]
( 1 . 9 , 1 . 9 ) node { $ 5 4 $ } ;
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\ f i l l [ red ]
( 0 . 3 5 , 0 . 3 5 ) node { $ 5 4 $ } ;
\ f i l l [ blue ]
( 0 . 8 , 0 . 8 ) node { $ 7 2 $ } ;
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\ f i l l [ red ]
( 1 . 4 , 0 . 3 5 ) node { $ 6 4 $ } ;
\ f i l l [ blue ]
( 1 . 9 , 0 . 8 ) node { $ 6 4 $ } ;
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TikZ code : F i g u r e XX: A 3 x 3 S t r a t e g i c form game
\ b e g i n { t i k z p i c t u r e } [ s c a l e =2]
4
% Outline matrix
\draw [ t h i c k ]
\draw [ t h i c k ]
\draw [ t h i c k ]
\draw [ t h i c k ]
( 0 , 0 )
( 0 , 0 )
(3.3 ,3.3)
(3.3 ,3.3)
(3.3 ,0) ;
(0 ,3.3) ;
( 3 . 3 , 0 ) ;
( 0 , 3 . 3 ) ;
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Figure 9: A 33 Strategic form game

Firm B
Left
Middle
64
Top
64
64
64
57
Firm A
Right
64
64
54
64
Mid
57
64
72
72
64
64
Bot
54
10
12
\draw [ t h i c k ]
\draw [ t h i c k ]
\draw [ t h i c k ]
\draw [ t h i c k ]
( 0.3 ,1.1)
( 0.3 ,2.2)
( 1 . 1 , 0 )
( 2 . 2 , 0 )
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( 3 . 3 , 1 . 1 ) ;
( 3 . 3 , 2 . 2 ) ;
(1.1 ,3.6) ;
(2.2 ,3.6) ;
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\draw [ d e n s e l y
dotted ]
dotted ]
dotted ]
dotted ]
( . 1 , 2 . 1 ) ( 1 , 1 . 2 ) ;
( . 1 , 1 ) ( 1 , 0 . 1 ) ;
( 1 . 2 , 1 ) ( 2 . 1 , 0 . 1 ) ;
( 1 . 2 , 2 . 1 ) ( 2 . 1 , 1 . 2 ) ;
dotted ]
dotted ]
dotted ]
dotted ]
dotted ]
( . 1 , 3 . 2 ) ( 1 , 2 . 3 ) ;
( 1 . 2 , 3 . 2 ) ( 2 . 1 , 2 . 3 ) ;
( 3 . 2 , . 1 ) ( 2 . 3 , 1 ) ;
( 3 . 2 , 1 . 2 ) ( 2 . 3 , 2 . 1 ) ;
( 3 . 2 , 2 . 3 ) ( 2 . 3 , 3 . 2 ) ;
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\ coordinate [ l a b e l= r i g h t : Top ] ( p 1 ) a t
\ coordinate [ l a b e l= r i g h t : Mid ] ( p 1 ) a t
\ coordinate [ l a b e l= r i g h t : Bot ] ( p 1 ) a t
( 0.5 ,2.7) ;
( 0.5 ,1.65) ;
( 0.5 ,0.55) ;
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\ coordinate [ l a b e l= above : L e f t ] ( p 1 ) a t ( 0 . 5 5 , 3 . 3 ) ;
\ coordinate [ l a b e l= above : Middle ] ( p 1 ) a t ( 1 . 6 5 , 3 . 3 ) ;
\ coordinate [ l a b e l= above : Right ] ( p 1 ) a t ( 2 . 7 , 3 . 3 ) ;
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\ coordinate [ l a b e l= above : \ bf {Firm B} ] ( p 1 ) a t ( 1 . 6 5 , 3 . 7 ) ;

\ coordinate [ l a b e l= l e f t : \ bf {Firm A} ] ( p 1 ) a t ( . 8 , 1 . 6 5 ) ;
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% F i l l i n payo f f s
\ f i l l [ red ]
( . 3 5 , 1 . 4 ) node { $ 5 7 $ } ; %Mid L e f t
\ f i l l [ blue ]
( 0 . 8 , 1 . 9 ) node { $ 5 7 $ } ;
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\ f i l l [ red ]
( 1 . 4 , 1 . 4 ) node { $ 7 2 $ } ; %Mid Middle
\ f i l l [ blue ]
( 1 . 9 , 1 . 9 ) node { $ 5 4 $ } ;
\ f i l l [ red ]
( 0 . 3 5 , 0 . 3 5 ) node { $ 5 4 $ } ;
\ f i l l [ blue ]
( 0 . 8 , 0 . 8 ) node { $ 7 2 $ } ;
%Bot L e f t
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\ f i l l [ red ]
( 1 . 4 , 0 . 3 5 ) node { $ 6 4 $ } ; %Bot Middle
\ f i l l [ blue ]
( 1 . 9 , 0 . 8 ) node { $ 6 4 $ } ;
\ f i l l [ red ]
( 2 . 5 , 0 . 3 5 ) node { $ 6 4 $ } ; %Bot R i g h t
\ f i l l [ blue ]
( 3 , 0 . 8 ) node { $ 6 4 $ } ;
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\ f i l l [ red ]
( 2 . 5 , 1 . 4 5 ) node { $ 6 4 $ } ; %Mid R i g h t
\ f i l l [ blue ]
( 3 , 1 . 9 ) node { $ 6 4 $ } ;
\ f i l l [ red ]
( 2 . 5 , 2 . 5 5 ) node { $ 6 4 $ } ; %Top R i g h t
\ f i l l [ b l u e ] ( 3 , 3 ) node { $ 6 4 $ } ;
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\ f i l l [ red ]
( 1 . 4 , 2 . 5 5 ) node { $ 6 4 $ } ; %Top Middle
\ f i l l [ blue ]
( 1 . 9 , 3 ) node { $ 6 4 $ } ;
\ f i l l [ red ]
( 0 . 3 5 , 2 . 5 5 ) node { $ 6 4 $ } ;
\ f i l l [ blue ]
( 0 . 8 , 3 ) node { $ 6 4 $ } ;
%Top L e f t
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Figure 10: An Extensive-form game

(57, 57)
Lef t
Firm B
p
To
Firm A
Bo
R ig h
t
(72, 54)
tto
m
Lef t
Firm B
(54, 72)
R ig h
t
(64, 64)
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TikZ code : F i g u r e 1 0 : An E x t e n s i v e form game
% Set the o v e r a l l layout of the t r e e

\ t i k z s t y l e { l e v e l 1}=[ l e v e l d i s t a n c e =3.5cm , s i b l i n g d i s t a n c e =3.5cm ]
\ t i k z s t y l e { l e v e l 2}=[ l e v e l d i s t a n c e =3.5cm , s i b l i n g d i s t a n c e =2cm ]
% D e f i n e s t y l e s f o r b a g s and l e a f s
\ t i k z s t y l e { bag } = [ t e x t width=4em , t e x t c e n t e r e d ]
\ t i k z s t y l e { end } = [ c i r c l e , minimum width=3pt , f i l l , i n n e r s e p=0pt ]
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% The s l o p e d o p t i o n g i v e s r o t a t e d e d g e l a b e l s . P e r s o n a l l y
% I f i n d s l o p e d l a b e l s a b i t d i f f i c u l t t o read . Remove t h e s l o p e d o p t i o n s
% to get horizontal l a b e l s .
\ b e g i n { t i k z p i c t u r e } [ grow=r i g h t , s l o p e d ]
\ node [ bag ] {Firm A}
child {
node [ bag ] {Firm B}
child {
node [ end , l a b e l=r i g h t :
{ $ ( 6 4 , 6 4 ) $ } ] {}
% e n t e r payo f f s f o r ( Bottom , R i g h t )
edge from p a r e n t
node [ above ] {$ Right $}
}
child {
{ $ ( 5 4 , 7 2 ) $ } ] {}
% e n t e r payo f f s f o r ( Bottom , L e f t )
node [ above ] {$ L e f t $}
}
node [ above ] {$ Bottom $}
}
child {
node [ bag ] {Firm B}
child {
{ $ ( 7 2 , 5 4 ) $ } ] {}
% e n t e r payo f f s f o r ( Top , R i g h t )
node [ above ] {$ Right $}
}
child {
{ $ ( 5 7 , 5 7 ) $ } ] {}
% e n t e r payo f f s f o r ( Top , L e f t )
node [ above ] {$ L e f t $}
}
node [ above ] {$Top$}
};
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\draw [ r e d ] ( 3 . 5 , 0 ) e l l i p s e ( 1cm and 3cm) ;

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Taxes, Price ceilings, and market equilibriums

Figure 11: An economics example from texample.com
E
YO
A
C
D
B
NX = x
G /T
TikZ code : F i g u r e 1 1 : An economics example from t e x a m p l e

. com
% > See TikZ code i n . t e x f i l e backup or on t e x a m p l e . com .
TikZ code : F i g u r e 1 2 : Market e q u i l i b r i u m an a l t e r n a t e
%
approach
11
% Draw a x e s
\draw [<>, t h i c k ] ( 0 , 2 ) node ( y a x i s ) [ above ] {$P$}
| ( 3 , 0 ) node ( x a x i s ) [ r i g h t ] {$Q$ } ;
% Draw two i n t e r s e c t i n g l i n e s
\draw ( 0 , 0 ) coordinate ( a 1 ) ( 2 , 1 . 8 ) coordinate ( a 2 ) ;
\draw ( 0 , 1 . 5 ) coordinate ( b 1 ) ( 2 . 5 , 0 ) coordinate ( b 2 ) ;
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Figure 12: Market equilibrium - an alternate approach

P
% C a l c u l a t e t h e i n t e r s e c t i o n o f t h e l i n e s a 1 a 2 and b 1 b 2
% and s t o r e t h e c o o r d i n a t e i n c .
\ coordinate ( c ) a t ( i n t e r s e c t i o n o f a 1a 2 and b 1b 2 ) ;
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% Draw l i n e s i n d i c a t i n g i n t e r s e c t i o n w i t h y and x a x i s . Here we use

% t h e p e r p e n d i c u l a r c o o r d i n a t e system
\draw [ dashed ] ( y a x i s | c ) node [ l e f t ] {$p $}
| ( x a x i s | c ) node [ below ] {$ q $ } ;
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% Draw a d o t t o i n d i c a t e i n t e r s e c t i o n p o i n t
\ f i l l [ r e d ] ( c ) c i r c l e ( 1 pt ) ;
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TikZ code : F i g u r e 1 3 : P r i c e e l a s t i c i t y o f demand
% Draw a x e s
\draw [<>, t h i c k ] ( 0 , 2 ) node ( y a x i s ) [ above ] {$P$}
| ( 3 , 0 ) node ( x a x i s ) [ r i g h t ] {$Q$ } ;
% Draw two i n t e r s e c t i n g l i n e s
\draw [ c o l o r=w h i t e ] ( 0 , 0 ) coordinate ( a 1 ) ( 2 , 2 ) coordinate ( a 2 ) ;
\draw ( 0 , 1 . 5 ) coordinate ( b 1 ) ( 1 . 5 , 0 ) coordinate ( b 2 ) node [ below ] {$Demand
$};
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13
% C a l c u l a t e t h e i n t e r s e c t i o n o f t h e l i n e s a 1 a 2 and b 1 b 2
% and s t o r e t h e c o o r d i n a t e i n c .
23
Figure 13: Price elasticity of demand

P
Unitary Elastic
Elastic
Inelastic
Demand
\ coordinate ( c ) a t ( i n t e r s e c t i o n o f a 1a 2 and b 1b 2 ) ;
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% Draw a d o t t o i n d i c a t e i n t e r s e c t i o n p o i n t
\ f i l l [ r e d ] ( c ) c i r c l e ( 1 pt ) ;
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\draw[>, dashed ] ( $ ( c ) + ( 0 , 0 . 1 5 ) $ ) ( $ ( c ) + ( . 7 , 0 . 8 5 ) $ ) ;
\draw[>, dashed ] ( $ ( c ) + ( 0 . 1 5 , 0 ) $ ) ( $ ( c ) + ( . 8 5 , 0 . 7 ) $ ) ;
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\ f i l l [ blue ]
\ f i l l [ blue ]
23
\draw[>] ( 1 . 5 , 1 . 5 ) node [ l a b e l= above : U n i t a r y E l a s t i c ] {} ( $ ( c ) + ( . 1 , . 1 ) $ ) ;
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( 0 . 5 , 1 . 5 ) node { E l a s t i c } ;
( 1 . 6 , 0 . 5 ) node { I n e l a s t i c } ;
TikZ code : F i g u r e 1 4 : An e x c i s e t a x

\ def \ d i n t { 4 . 5 }
%Yi n t e r c e p t f o r DEMAND.
\ def \ d s l p { 0.5}
%S l o p e f o r DEMAND.
\ def \ s i n t { 1 . 2 }
%Yi n t e r c e p t f o r SUPPLY.
\ def \ s s l p { 0 . 8 }
%S l o p e f o r SUPPLY.
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\ def \ tax { 1 . 5 }
%E x c i s e ( peru n i t ) t a x
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\ def \demand{\x , { \ d s l p \ x+\d i n t }}
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Figure 14: An excise tax

P
Supply
Pd
tax
Ps
P (q) = 12 q +
QT
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9
2
\ def \ s u p p l y {\x , { \ s s l p \ x+\ s i n t }}

\ def \demandtwo {\x , { \ d s l p \ x+\d i n t+\dsh }}
\ def \ supplytwo {\x , { \ s s l p \ x+\ s i n t +\s s h }}
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\ coordinate ( i n t s ) a t ( { ( \ s i n t \d i n t ) / ( \ d s l p \ s s l p ) } , { ( \ s i n t \d i n t ) / ( \ d s l p \
s s l p ) \ s s l p +\ s i n t } ) ;
\ coordinate ( ep ) a t ( 0 , { ( \ s i n t \d i n t ) / ( \ d s l p \ s s l p ) \ s s l p +\ s i n t } ) ;
\ coordinate ( eq ) a t ( { ( \ s i n t \d i n t ) / ( \ d s l p \ s s l p ) } , 0 ) ;
\ coordinate ( d i n t ) a t ( 0 , { \ d i n t } ) ;
\ coordinate ( s i n t ) a t ( 0 , { \ s i n t } ) ;
\ coordinate ( t e q ) a t ( { ( \ s i n t +\tax \d i n t ) / ( \ d s l p \ s s l p ) } , 0 ) ; %q u a n t i t y
\ coordinate ( t e p ) a t ( 0 , { ( \ s i n t +\tax \d i n t ) / ( \ d s l p \ s s l p ) \ s s l p +\ s i n t +\tax } ) ;
%p r i c e
\ coordinate ( t i n t ) a t ( { ( \ s i n t +\tax \d i n t ) / ( \ d s l p \ s s l p ) } , { ( \ s i n t +\tax \d i n t )
/ ( \ d s l p \ s s l p ) \ s s l p +\ s i n t +\tax } ) ; %t a x e q u i l i b r i u m
\ coordinate ( s e p ) a t ( 0 , { \ s s l p ( \ s i n t +\tax \d i n t ) / ( \ d s l p \ s s l p )+\ s i n t } ) ;
\ coordinate ( s e n ) a t ( { ( \ s i n t +\tax \d i n t ) / ( \ d s l p \ s s l p ) } , { \ s s l p ( \ s i n t +\tax \
d i n t ) / ( \ d s l p \ s s l p )+\ s i n t } ) ;
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%DEMAND
\draw [ t h i c k , c o l o r=b l u e ] p l o t ( \ demand ) node [ r i g h t ] {$P( q ) = \ f r a c {1}{2} q+\ f r a c
{9}{2}$};
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%SUPPLY
\draw [ t h i c k , c o l o r=p u r p l e ] p l o t ( \ s u p p l y ) node [ r i g h t ] { Supply } ;
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\draw[>] ( 0 , 0 ) ( 6 . 2 , 0 ) node [ r i g h t ] {$Q$ } ;
\draw[>] ( 0 , 0 ) ( 0 , 6 . 2 ) node [ above ] {$P$ } ;
\draw [ d e c o r a t e , d e c o r a t i o n ={b r a c e } , t h i c k ] ( $ ( s e p ) +( 0.8 ,0) $ ) ( $ ( t e p )
+( 0.8 ,0) $ ) node [ midway , below=8pt , x s h i f t =18pt ] { tax } ;
\draw [ dashed ] ( t i n t ) ( t e q ) node [ below ] {$Q T$ } ;
\draw [ dashed ] ( t i n t ) ( t e p ) node [ l e f t ] {$P d $ } ;
\draw [ dashed ] ( s e n ) ( s e p ) node [ l e f t ] {$P s $ } ;
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Figure 15: A price ceiling

P
Supply
Price Ceiling
Pc
P (q) = 12 q +
Qs
TikZ code : F i g u r e 1 5 : A p r i c e c e i l i n g

Qd
\ def \ d i n t { 4 . 5 }
\ def \ d s l p { 0.5}
\ def \ s i n t { 1 . 2 }
\ def \ s s l p { 0 . 8 }
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9
2
11
\ def \ p f c { 2 . 5 }
%P r i c e f l o o r or c e i l i n g
13
15
17
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25

s s l p ) \ s s l p +\ s i n t } ) ;
\ coordinate ( p f q ) a t ( { ( \ pfc \d i n t ) / ( \ d s l p ) } , 0 ) ;
\ coordinate ( pfp ) a t ( { ( \ pfc \d i n t ) / ( \ d s l p ) } , { \ p f c } ) ;
\ coordinate ( s f q ) a t ( { ( \ pfc \ s i n t ) / ( \ s s l p ) } , 0 ) ;
\ coordinate ( s f p ) a t ( { ( \ pfc \ s i n t ) / ( \ s s l p ) } , { \ p f c } ) ;
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%DEMAND
{9}{2}$};
%SUPPLY
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\draw[>] ( 0 , 0 ) ( 6 . 2 , 0 ) node [ r i g h t ] {$Q$ } ;
\draw[>] ( 0 , 0 ) ( 0 , 6 . 2 ) node [ above ] {$P$ } ;
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%P r i c e f l o o r and c e i l i n g l i n e s
\draw [ dashed , c o l o r=b l a c k ] p l o t ( \ x , { \ p f c } ) node [ r i g h t ] {$P c $ } ;
\draw [ dashed ] ( pfp ) ( p f q ) node [ below ] {$Q d $ } ;
\draw [ dashed ] ( s f p ) ( s f q ) node [ below ] {$Q s $ } ;
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\draw[>, b a s e l i n e =5] ( $ ( 0 , { \ p f c } ) + ( 1 . 5 , 0 . 7 ) $ ) node [ l a b e l= l e f t : P r i c e C e i l i n g ] {}

( $ ( 0 , { \ p f c } ) + ( . 1 , 0 . 1 ) $ ) ;
TikZ code : F i g u r e 1 6 : A p r i c e f l o o r

\ def \ d i n t { 4 . 5 }
\ def \ d s l p { 0.5}
\ def \ s i n t { 1 . 2 }
\ def \ s s l p { 0 . 8 }
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Figure 16: A price floor

P
Supply
Price Floor
Pf
P (q) = 12 q +
Qd
Qs
9
2
11
\ def \ p f c { 3 . 8 }
%P r i c e f l o o r or c e i l i n g
13
15
17
19
21
23
25

s s l p ) \ s s l p +\ s i n t } ) ;
\ coordinate ( p f q ) a t ( { ( \ pfc \d i n t ) / ( \ d s l p ) } , 0 ) ;
\ coordinate ( pfp ) a t ( { ( \ pfc \d i n t ) / ( \ d s l p ) } , { \ p f c } ) ;
\ coordinate ( s f q ) a t ( { ( \ pfc \ s i n t ) / ( \ s s l p ) } , 0 ) ;
\ coordinate ( s f p ) a t ( { ( \ pfc \ s i n t ) / ( \ s s l p ) } , { \ p f c } ) ;
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%DEMAND
{9}{2}$};
%SUPPLY
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\draw[>] ( 0 , 0 ) ( 6 . 2 , 0 ) node [ r i g h t ] {$Q$ } ;
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\draw[>] ( 0 , 0 ) ( 0 , 6 . 2 ) node [ above ] {$P$ } ;

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%P r i c e f l o o r and c e i l i n g l i n e s
\draw [ dashed , c o l o r=b l a c k ] p l o t ( \ x , { \ p f c } ) node [ r i g h t ] {$P f $ } ;
\draw [ dashed ] ( pfp ) ( p f q ) node [ below ] {$Q d $ } ;
\draw [ dashed ] ( s f p ) ( s f q ) node [ below ] {$Q s $ } ;
\draw[>, b a s e l i n e =5] ( $ ( 0 , { \ p f c } ) + ( 1 . 5 , 0 . 7 ) $ ) node [ l a b e l= l e f t : P r i c e F l o o r ] {}
($(0 ,{\ pfc }) +( .1 ,0.1) $) ;
Other Resources
Some useful resources for diagrams are as follows:
http://www.texample.net/tikz/examples/ - This site has many examples of TikZ diagrams from a variety of disciplines (including mathematics, economics, and electrical engineering), however not all the supplied code works perfectly right out of the box. This is a
good place to see the capability of TikZ
http://sourceforge.net/projects/pgf/ - This is where you can acquire the latest version
of TikZ.
http://cran.r-project.org/web/packages/tikzDevice/vignettes/tikzDevice.pdf - tikzdevice is a package that allows you to generate tikz code directly from [R] statistical software
for input into a LateX document.
http://www.tug.org/pracjourn/2007-1/mertz/mertz.pdf - This is a 22-page tutorial on
TikZ, that perhaps gives a more in depth treatment of some of the topics discussed here.
http://www.math.ucla.edu/~getreuer/tikz.html - This has some more examples from
a mathematician at UCLA.
29

Tikz Package For Economists

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Tikz Package For Economists

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usepackage{TikZ } for economists

TikZ code : F i g u r e 1 : A twonode network

above : $A$ ] (A) a t ( 2 . 5 , 2 . 5 ) ;

% Draw l i n e s and arrows .

Drawing lines and arrows

A Few Things to Notice

The code above plots the following function:

% Shade orange are a u n d e r n e a t h c u r v e .

% Draw and l a b e l normal d i s t r i b u t i o n f u n c t i o n

% Draw and l a b e l normal d i s t r i b u t i o n f u n c t i o n

Some TikZ diagrams with code

Budget Constraints and Indifference Curves

TikZ code : F i g u r e 2 : A Generic P r i c e Change

\ b e g i n { t i k z p i c t u r e } [ domain =0:5 , r a n g e =4:5 , s c a l e =1, t h i c k ]

TikZ code : F i g u r e 3 : A Budget c o n s t r a i n t t h a t has a

\ def \ i c a {\x , { 2 / \ x20}}

\ def \ bcv {\x ,{( \ pa ) / ( \ pb ) \ x+(\ i n c ) / ( \ pb ) }}

Figure 3: A Budget constraint that has a voucher for x1

\ def \ bcx {\x , { ( 5 ) /\ x }}

Income & Substitution Effects

\ b e g i n { t i k z p i c t u r e } [ domain =0:100 , r a n g e =0:200 , s c a l e =0.4 , t h i c k , f o n t =\ s c r i p t s i z e ]

%Draw axes , and d o t t e d e q u i l i b r i u m l i n e s .

\draw ( 2 , 8 ) node [ l a b e l= below : $BC 1 $ ] { } ;

\ b e g i n { t i k z p i c t u r e } [ domain =0:100 , r a n g e =0:200 , s c a l e =0.7 , t h i c k ]

Figure 5: A decrease in the price of x1 by half.

TikZ code : F i g u r e XX: A twonode network

Some Useful Diagrams

\ b e g i n { t i k z p i c t u r e } [ domain =0:5 , s c a l e =1, t h i c k ]

TikZ code : F i g u r e 7 : The area b e t w e e n two c u r v e s

Figure 7: The area between two curves

%Shade orange are a

\draw [ t h i c k , c o l o r=blue , domain = 0 : 6 ] p l o t ( \ normalone ) node [ r i g h t ] {$\lambda 1 $ } ;

%Draw dashed l i n e s from mean t o xa x i s

Game Theory Diagrams

TikZ code : F i g u r e 8 : A 2 x 2 S t r a t e g i c form game

\ coordinate [ l a b e l= above : \ bf {Firm B} ] ( p 1 ) a t ( 1 . 1 , 2 . 5 ) ;

TikZ code : F i g u r e XX: A 3 x 3 S t r a t e g i c form game

Figure 9: A 33 Strategic form game

\ coordinate [ l a b e l= above : \ bf {Firm B} ] ( p 1 ) a t ( 1 . 6 5 , 3 . 7 ) ;

Figure 10: An Extensive-form game

TikZ code : F i g u r e 1 0 : An E x t e n s i v e form game

% Set the o v e r a l l layout of the t r e e

\draw [ r e d ] ( 3 . 5 , 0 ) e l l i p s e ( 1cm and 3cm) ;

Taxes, Price ceilings, and market equilibriums

TikZ code : F i g u r e 1 1 : An economics example from t e x a m p l e

% > See TikZ code i n . t e x f i l e backup or on t e x a m p l e . com .

TikZ code : F i g u r e 1 2 : Market e q u i l i b r i u m an a l t e r n a t e

Figure 12: Market equilibrium - an alternate approach

% Draw l i n e s i n d i c a t i n g i n t e r s e c t i o n w i t h y and x a x i s . Here we use

TikZ code : F i g u r e 1 3 : P r i c e e l a s t i c i t y o f demand

Figure 13: Price elasticity of demand

\draw[>] ( 1 . 5 , 1 . 5 ) node [ l a b e l= above : U n i t a r y E l a s t i c ] {} ( $ ( c ) + ( . 1 , . 1 ) $ ) ;

\ b e g i n { t i k z p i c t u r e } [ domain =0:5 , s c a l e =1, t h i c k ]

\ def \demand{\x , { \ d s l p \ x+\d i n t }}

Figure 14: An excise tax

\ def \ s u p p l y {\x , { \ s s l p \ x+\ s i n t }}

%Draw axes , and d o t t e d e q u i l i b r i u m l i n e s .

Figure 15: A price ceiling

\ b e g i n { t i k z p i c t u r e } [ domain =0:5 , s c a l e =1, t h i c k ]

\ def \demand{\x , { \ d s l p \ x+\d i n t }}

%Draw axes , and d o t t e d e q u i l i b r i u m l i n e s .

\draw[>, b a s e l i n e =5] ( $ ( 0 , { \ p f c } ) + ( 1 . 5 , 0 . 7 ) $ ) node [ l a b e l= l e f t : P r i c e C e i l i n g ] {}

\ b e g i n { t i k z p i c t u r e } [ domain =0:5 , s c a l e =1, t h i c k ]