In this chapter, you will learn to solve these economic puzzles: What is a Direct Relationship between two variables? What is the Slope of a line? What is an Inverse Relationship between two variables? What is an Independent Relationship between two variables? | Appendix 1 Applying Graphs to Economics ©1999 South-Western College Publishing Key Concepts Summary Practice Quiz Internet Exercises What is a Direct Relationship between two variables? When one increases, the other increases and vice versa * Return to previous slide while in slide show * What is the Slope of a line? The ratio of change in the variable on the vertical axis (the rise or fall) to change in the variable on the horizontal axis (the run). * Slope = rise/run = vertical axis/ horizontal axis = Y/ X * Expenditure for Personal Computer at Different Annual Incomes Personal Expenditure Annual Income $1,000 $2,000 $3,000 $4,000 $10,000 $20,000 $30,000 $40,000 * 4 3 2 1 10 20 30 40 A B C D Y=1 X=10 Y X * What is an Inverse Relationship between two variables? When one increases, the other decreases and vice versa * Quantity of Compact Discs Consumers Purchased at Different Prices Price per compact disc Quantity of compact discs $20 $15 $10 25,000,000 50,000,000 75,000,000 $5 100,000,000 * 20 15 10 5 25 50 75 100 A B C D Y=5 X=25 Negative Sloping Curve X Y * What is an Independent Relationship between two variables? When one variable changes, the other variable remains unchanged * Expenditure for Toothpaste at Different Annual Incomes Personal Expenditure Annual Income $10 $20 $30 $40 $10,000 $20,000 $30,000 $40,000 * 40 30 20 10 10 20 30 40 A B C D Y=0 X=10 X Y * Can Slope vary along a curve? Yes, the slope of a curve can vary along the curve * 4 3 2 1 10 20 30 40 A Y=2 X=30 X Y * 20 15 10 5 25 50 75 100 A Y= X=50 -10 X Y * How can I tell the difference between a movement along a curve and a shift in the curve? When price changes, there is movement along a curve. When something other than price changes, the whole curve shifts. * What can change other than price? When income increases, for example, the whole demand curve shifts upward * 20 15 10 5 25 50 75 100 Annual Income $60,000 Annual Income . | Appendix 1 Applying Graphs to Economics ©1999 South-Western College Publishing Key Concepts Summary Practice Quiz Internet Exercises What is a Direct Relationship between two variables? When one increases, the other increases and vice versa * Return to previous slide while in slide show * What is the Slope of a line? The ratio of change in the variable on the vertical axis (the rise or fall) to change in the variable on the horizontal axis (the run). * Slope = rise/run = vertical axis/ horizontal axis = Y/ X * Expenditure for Personal Computer at Different Annual Incomes Personal Expenditure Annual Income $1,000 $2,000 $3,000 $4,000 $10,000 $20,000 $30,000 $40,000 * 4 3 2 1 10 20 30 40 A B C D Y=1 X=10 Y X * What is an Inverse Relationship between two variables? When one increases, the other decreases and vice versa * Quantity of Compact Discs Consumers Purchased at Different Prices Price per compact disc Quantity of compact discs $20 $15 $10 25,000,000 .
