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

LO7 Table Graph IncomeConsumptionPoint $ $ abcdeabcde Consumption (C) Income (Y) $ a b c d e $ ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.12

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

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

LO7 Consumption (C) Income (Y) $ $ Slope = Vertical Change Horizontal Change = 0.5 == Vertical Change Horizontal Change 1-5 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.15

LO7 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.16 Ticket PriceAttendance, thousands $

LO7 Slope = Vertical Change Horizontal Change = = Horizontal Change Vertical Change Ticket Price $ Attendance = ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.17

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

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

 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

LO7 Consumption (C) Income (Y) $ $ Y = C 1-11 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.111

P = 50 – 2.5Q LO Ticket Price Attendance 1-12 ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.112

 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

LO ©2013 McGraw-Hill Ryerson Ltd.Appendix 1.114

 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