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To locate the position of a point in a plane (say X-Y which are mutually perpendicular intersecting lines), we require the two co-ordinates of the point with respective to the two co-ordinate axes. But in real life, in addition to points in a plane, we deal with points in a space - the locations of which depend on three co-ordinates. Ex: Central position of a ceiling fan in your class room, in which the height from the floor is also important.
Consider three mutual perpendicular planes intersecting at a point 'O'. These three planes intersect along the lines X'OX (called the X-axis), Y'OY (called the Y-axis) and Z'OZ (called the Z-axis). These three axes constitute the rectangular co-ordinate system.
Note: The XOY plane is considered as horizontal (say the plane of the paper). Then the line Z'OZ (which is perpendicular to the plane XOY) is the vertical.
The three co-ordinate planes are: XY-plane (XOY), YZ-plane (YOZ) and ZX-plane (ZOX). The point 'O' is called as the origin of the co-ordinate system. Refer above figure.