TOOLS USED TO EXPRESS RELATIONSHIPS
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Transcript TOOLS USED TO EXPRESS RELATIONSHIPS
TOOLS USED TO EXPRESS
RELATIONSHIPS
Schedules
Graphs
Equations
Schedule ( or Table)
Definition:
a list of different
values of a variable
and the value of a
related variable
Price
$2
4
6
8
Quantity
20
15
10
5
Equation
Definition:
a mathematical statement usually involving
dependent and independent variables.
Example:
Qd = f(P)
Dependent variable:
a variable that changes as the controlled
variable is changed
Independent variable:
the controlled variable
a variable that is not a function of the
equation and causes change in the
dependent variable
Graph
Definition:
a visual
representation of
functional
relationships or the
movements of a
variable over time.
Purpose
to visualize the
relationship
P
D
Q
Constructing a Graph
Step 1: Number line
Y
Positive Y
Negative X
Positive Y
Positive X
0
X
0
Negative Y
Negative X
Negative Y
Positive X
Constructing a Graph
Step 1: Number line
0
5
Do this…
10
20
15
25
NOT this…
0
5
20
30
52
55
70 72
Constructing a Graph
Step 2: Label axis
Price
Quantity
Constructing a Graph
Step 2: Plot Points on graph
Price
..
.
Quantity
Constructing a Graph
Step 3: Connect Points on graph
Price
..
.
Quantity
Constructing a Graph
Step 4: Label Lines
Price
..
.
Demand
Quantity
Linear Relationships between
Variables
Negative
Relationship
also called:
Inverse or Indirect
Relationship
as values of X
change, values of Y
change in the
opposite direction
Y
Y = f(X)
X
Linear Relationships between
Variables
Positive Relationship
also called:
Direct Relationship
as values of X
change, values of Y
change in the same
direction
Y
Y = f(X)
X
Measuring Linear
Relationships
Slope
measures how
strongly the
dependent variable is
influenced by the
independent variable
Formula
Slope = Rise / Run
= Change in Y
Change in X
Measuring Linear
Relationships
Negative lines have
negative slopes
Positive lines have
positive slopes
Straight lines have
only one slope along
the line.
Intercept:
the value of the dependent variable (Y)
when the value of the independent variable
(X) is zero
Y
Y = f(X)
intercept
X
Graphical Assumptions
Homogeneous Units
each unit of the independent variable (X) is
identical
Divisibility
each unit of the independent variable can
be divided infinitesimally
Nonlinear Relationships
Exhibit changing
relationship between
variables
Y
Y = f(X)
Have more than one
slope along the line
X
Nonlinear relationships
At the minimum
point the slope is
equal to zero
At the maximum
point the slope is
equal to zero
Nonlinear Relationships
Four types:
1.
Increasing at an increasing rate
2.
Increasing at a decreasing rate
3.
Decreasing at a decreasing rate
4.
Decreasing at an increasing rate
Nonlinear relationship
Increasing at an
Increasing Rate:
Y
Y = f(X)
increases in the X
variable lead to
larger increases in
the Y Variable
X
Nonlinear relationship
Increasing at a
Decreasing Rate:
Y
Y = f(X)
increases in the X
variable lead to
smaller increases in
the Y Variable
X
Nonlinear relationship
Decreasing at a
Decreasing Rate:
increases in the X
variable lead to
smaller decreases in
the Y Variable
Y
Y = f(X)
X
Nonlinear relationship
Decreasing at an
Increasing Rate:
increases in the X
variable lead to
larger decreases in
the Y Variable
Y
Y = f(X)
X