1. Copyright 2008 The McGraw-Hill Companies 1a-1 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix 1 Graphs and Their Meaning Appendix

2. Copyright 2008 The McGraw-Hill Companies 1a-2 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix Graphs and Their Meaning TableGraph IncomeConsumptionPoint $ 0 100 200 300 400 $ 50 100 150 200 250 abcdeabcde Consumption (C) $400 300 200 100 0 Income (Y) $100 200 300 400 a b c d e Plot Data Points to Create Graph

3. Copyright 2008 The McGraw-Hill Companies 1a-3 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix Direct and Inverse Relationships Direct Relationship Inverse Relationship Both Variables Move Up or Down Together Variables Move Opposite Each Other

4. Copyright 2008 The McGraw-Hill Companies 1a-4 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix Dependent and Independent Variables Independent Variable –The Cause or Source of Change Dependent Variable –The Effect or Result of the Change in the Independent Variable Other Things Equal Assumption

5. Copyright 2008 The McGraw-Hill Companies 1a-5 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix 200 150 100 50 0 Slope of a Line Positive Slope of a Straight Line Slope = Vertical Change Horizontal Change +50 +100 =.5== 1 2 50100150200 50 100 Horizontal Change Vertical Change

6. Copyright 2008 The McGraw-Hill Companies 1a-6 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix 50 40 30 20 10 0 Slope of a Line Negative Slope of a Straight Line Slope = Vertical Change Horizontal Change -10 +4 == 1 2 4 8 12 16 20 -10 4 Horizontal Change Vertical Change -2

7. Copyright 2008 The McGraw-Hill Companies 1a-7 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix Slope of a Line Slopes and Measurement Units Slopes and Marginal Analysis Infinite and Zero Slopes Prices of Bananas Purchases of WatchesDivorce Rate Consumption Slope = Zero Slope = Infinite

8. Copyright 2008 The McGraw-Hill Companies 1a-8 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix 50 40 30 20 10 0 Slope of a Line Equation of a Straight Line y = a + bx 4 8 12 16 20 -10 4 Horizontal Change Vertical Change Vertical Intercept (a) Slope (b) Independent Variable (x) Dependent Variable (y)

9. Copyright 2008 The McGraw-Hill Companies 1a-9 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix 50 40 30 20 10 0 Slope of a Line Equation of a Straight Line 4 8 12 16 20 -10 4 Horizontal Change Vertical Change Dependent Variable (Q) Independent Variable (P) Economists Put Independent Variable on Vertical Axis y = a + bx P = 50 – 2.5Q Becomes

10. Copyright 2008 The McGraw-Hill Companies 1a-10 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix 20 15 10 5 0 Slope of a Nonlinear Curve Slope is a Tangent Straight Line 5 10 15 20 A B b b a a Tangent at A is the Slope of Line a-a Tangent at B is the Slope of Line b-b

11. Copyright 2008 The McGraw-Hill Companies 1a-11 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix Key Terms Page horizontal axis vertical axis direct relationship inverse relationship independent variable dependent variable slope of a straight line vertical intercept

12. Copyright 2008 The McGraw-Hill Companies 1a-12 Graphs and their Meaning Direct and Inverse Relationships Dependent and Independent Variables Slope of a Line Equation of a Straight Line Slope of a Curve Key Terms End Show Appendix Next Chapter Preview… The Market System and the Circular Flow