GRAPHS IN ECONOMICS

STUDY GUIDE MULTIPLE CHOICE, #4-19 SHORT ANSWER, #2-8

A POSITIVE RELATIONSHIP X Y

A NEGATIVE RELATIONSHIP X Y

SLOPE CHANGE IN Y GIVEN A CHANGE IN X How much one variable changes when another variable changes. How much more people wish to sell as the price rises. How much current consumption must fall to increase capital production

SLOPE ON A STRAIGHT LINE RISE OVER RUN CHANGE IN Y: Y 2 -Y 1 DIVIDED BY CHANGE IN X X 2 -X 1

POSITIVE RELATIONSHIP STRAIGHT LINE X Y Y 2 -Y = 5 X 2 -X = 1 5/1=5 THE SLOPE IS +5

NEGATIVE RELATIONSHIP STRAIGHT LINE X Y Y 2 -Y = -2 X 2 -X = 1 -2/1 = -2 THE SLOPE IS -2

SLOPE ON A CURVE X Y

SLOPE ON A CURVE First the curve has a negative slope, it reaches a minimum and then it has a positive slope. At the minimum the slope is zero.

SLOPE ACROSS AN ARC CREATE A STRAIGHT LINE BETWEEN THE TWO POINTS OF THE ARC CALCULATE SLOPE JUST AS FOR A STRAIGHT LINE

SLOPE ACROSS AN ARC Pt. 1 (20,8) Pt. 2 (60,16) Y 2 -Y = 8 X 2 -X = 40 8/40 =.2 THE SLOPE IS.2

SLOPE ACROSS AN ARC Pt. 2 (16, 0) Pt. 1 (7, 30) Y 2 -Y = 9 X 2 -X = -30 9/-30 = THE SLOPE IS -.3

SLOPE AT A POINT ON A CURVE Draw a tangent to the curve Calculate the slope along the tangent Note that the slope should be comparable to the slope along an arc.

SLOPE AT A POINT ON A CURVE Pt. 2 (0, 10) Pt. 1 (40, 4) Y 2 -Y = 6 X 2 -X = -40 6/-40 = THE SLOPE IS -.15

SLOPE AT A POINT ON A CURVE Pt. 2 (3, 3) Pt. 1 (8, 23) Y 2 -Y = -20 X 2 -X = / -5 = THE SLOPE IS 4