1. PART 1: AN INTRODUCTION TO ECONOMICS AND THE ECONOMY ©2013 McGraw-Hill Ryerson Ltd. Prepared by Dr. Amy Peng Ryerson University

2. 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 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.12

3. LO7 Direct Relationship 1-3 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.13

4. LO7 Inverse Relationship 1-4 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.14

5. LO7 Consumption (C) Income (Y) $100 200 300 400 $400 300 200 100 0 Slope = Vertical Change Horizontal Change +50 +100 = 0.5 == 1 2 50 100 Vertical Change Horizontal Change 1-5 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.15

6. LO7 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.16 Ticket PriceAttendance, thousands $500 404 308 2012 1016 020 1-6

7. 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 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.17

8.  Slopes and measurement units  Slopes and marginal analysis  Infinite and zero slopes ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.18

9. LO7 Price of Bananas Consumption Purchases of digital camerasDivorce Rate Slope = Infinite Slope = Zero 1-9 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.19

10.  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 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.110

11. LO7 Consumption (C) Income (Y) $100 200 300 400 $400 300 200 100 0 Y = 50 +.5C 1-11 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.111

12. P = 50 – 2.5Q LO7 50 40 30 20 10 4 8 12 16 20 Ticket Price Attendance 1-12 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.112

13.  Slope always changes  Must use a line tangent to the curve to find slope at that point ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.113

14. LO7 20 15 10 5 0 5 10 15 20 1-14 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.114

15.  Graphs represent economic relationship  Positive/directly related variables and positive sloped line  Negative/inversely related variables and negative sloped line  The slope of a straight line is the ratio of the vertical change to the horizontal change between any two points.  The slope of a curve at any point is determined by calculating The slope of a straight line tangent to the curve at that point. ©2013 McGraw-Hill Ryerson Ltd. Appendix 1.115