1. 01A Limits, Alternatives, and Choices Appendix McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Construction of a Graph LO7 Table Graph IncomeConsumptionPoint $ 0 100 200 300 400 $ 50 100 150 200 250 abcdeabcde Consumption (C) Income (Y) $100 200 300 400 a b c d e $400 300 200 100 0 1-2

3. Direct and Inverse Relationships LO7 Direct relationship Both variables move up or down together 1-3

4. Direct and Inverse Relationships Inverse relationship LO7 Variables move opposite of each other 1-4

5. Slope of a Line LO7 Consumption (C) Income (Y) $100 200 300 400 $400 300 200 100 0 Positive slope of a straight line Slope = Vertical Change Horizontal Change +50 +100 = 0.5== 1 2 50 100 Vertical Change Horizontal Change 1-5

6. Slope of a Line LO7 Ticket PriceAttendance, thousands $500 404 308 2012 1016 020 1-6

7. Slope of a Line Negative slope of a straight line LO7 Slope = Vertical Change Horizontal Change = -10 +4 = 1 2 -2 50 40 30 20 10 4 8 12 16 20 -10 4 Horizontal Change Vertical Change Ticket Price $ Attendance = -2.5 1-7

8. LO7 Slope of a Line Slopes and measurement units Slopes and marginal analysis Infinite and zero slopes 1-8

9. LO7 Slope of a Line Price of Bananas Consumption Purchases of watchesDivorce Rate Slope = Infinite Slope = Zero 1-9

10. LO7 Equation of a Linear Relationship y = a + bx y is the dependent variable a is the vertical intercept b is the slope of the line x is the independent variable 1-10

11. Equation of a Line LO7 Consumption (C) Income (Y) $100 200 300 400 $400 300 200 100 0 Y = 50 +.5C 1-11

12. Equation of a Line P = 50 – 2.5Q LO7 50 40 30 20 10 4 8 12 16 20 Ticket Price Attendance 1-12

13. LO7 Slope of a Nonlinear Curve Slope always changes Must use a line tangent to the curve to find slope at that point 1-13

14. Slope of a Nonlinear Curve LO7 20 15 10 5 0 5 10 15 20 Use tangent lines to find the slope 1-14