macroeconomic mcgrowhill macro ch 1 appendix 19e use this one

01A McGraw-Hill/Irwin Appendi x Limits, Alternatives, and Choices Copyright © 2012 by The McGraw-Hill Companies, Inc All rights reserved Construction of a Graph Graph Table Income Consumption Point $ $ 50 a 100 100 b 200 150 c 300 200 d 400 250 e Consumption (C) $400 300 e c 100 LO7 d 200 b a $100 200 300 400 Income (Y) 1-2 Direct and Inverse Relationships • Direct relationship • LO7 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 • Positive slope of a straight line Vertical Change +50 Slope = = = = 0.5 Horizontal Change +100 Consumption (C) $400 300 200 100 LO7 50 Vertical Change 100 Horizontal Change $100 200 300 Income (Y) 400 1-5 Slope of a Line Ticket Price $50 40 30 20 10 LO7 Attendance, thousands 12 16 20 1-6 Slope of a Line • Negative slope of a straight line Vertical Change -10 Slope = = = Horizontal Change +4 -2 = -2.5 50 Ticket Price $ 40 30 Vertical 20 Change -10 10 Horizontal Change 12 Attendance LO7 16 20 1-7 Slope of a Line LO7 • Slopes and measurement units • Slopes and marginal analysis • Infinite and zero slopes 1-8 Slope = Infinite Purchases of watches LO7 Consumption Price of Bananas Slope of a Line Slope = Zero Divorce Rate 1-9 Equation of a Linear Relationship • y = a + bx • • • • LO7 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 Consumption (C) Y = 50 + 5C $400 300 200 100 LO7 $100 200 300 Income (Y) 400 1-11 Equation of a Line P = 50 – 2.5Q 50 Ticket Price 40 30 20 10 12 16 20 Attendance LO7 1-12 Slope of a Nonlinear Curve • • LO7 Slope always changes Must use a line tangent to the curve to find slope at that point 1-13 Slope of a Nonlinear Curve • Use tangent lines to find the slope 20 15 10 5 LO7 10 15 20 1-14 ... 300 200 10 0 LO7 $10 0 200 300 Income (Y) 400 1- 11 Equation of a Line P = 50 – 2.5Q 50 Ticket Price 40 30 20 10 12 16 20 Attendance LO7 1- 12 Slope of a Nonlinear Curve • • LO7 Slope always changes... thousands 12 16 20 1- 6 Slope of a Line • Negative slope of a straight line Vertical Change -10 Slope = = = Horizontal Change +4 -2 = -2.5 50 Ticket Price $ 40 30 Vertical 20 Change -10 10 Horizontal Change... always changes Must use a line tangent to the curve to find slope at that point 1- 13 Slope of a Nonlinear Curve • Use tangent lines to find the slope 20 15 10 5 LO7 10 15 20 1- 14