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

Construction of a Graph LO7 Table Graph IncomeConsumptionPoint $ $ abcdeabcde Consumption (C) Income (Y) $ a b c d e $

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

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

Slope of a Line LO7 Consumption (C) Income (Y) $ $ Positive slope of a straight line Slope = Vertical Change Horizontal Change = 0.5== Vertical Change Horizontal Change 1-5

Slope of a Line LO7 Ticket PriceAttendance, thousands $

Slope of a Line Negative slope of a straight line LO7 Slope = Vertical Change Horizontal Change = = Horizontal Change Vertical Change Ticket Price $ Attendance =

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

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

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

Equation of a Line LO7 Consumption (C) Income (Y) $ $ Y = C 1-11

Equation of a Line P = 50 – 2.5Q LO Ticket Price Attendance 1-12

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

Slope of a Nonlinear Curve LO Use tangent lines to find the slope 1-14