978-0077660772 Chapter 1 Appendix Part 1

Price of Oranges

Quantity of Oranges

Inverse Relationship

Chapter 01 Appendix

McConnell Brue Flynn 20e

APPENDIX DISCUSSION QUESTIONS

1. Briefly explain the use of graphs as a way to represent economic relationships. What is an

inverse relationship? How does it graph? What is a direct relationship? How does it graph? LO8

Answer: Graphs help us visualize relationships between key economic variables in the

data. For example, the relationship between the price of oranges and the number of

As another example, the relationship between the quality of a textbook and the number of

textbooks sold is likely to be a direct relationship. A direct relationship is one where we

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Number of Textbooks Sold

Quality of the Textbook

Direct Relationship

Chapter 01 Appendix

2. Describe the graphical relationship between ticket prices and the number of people choosing to

visit amusement parks. Is that relationship consistent with the fact that, historically, park

attendance and ticket prices have both risen? Explain. LO8

Answer: There is likely an inverse relationship between ticket prices and the number of

The fact that, historically, park attendance and ticket prices have both risen over time

3. Look back at Figure 2, which shows the inverse relationship between ticket prices and game

attendance at Gigantic State University. (a) Interpret the meaning of both the slope and the

intercept. (b) If the slope of the line were steeper, what would that say about the amount by which

ticket sales respond to increases in ticket prices? (c) If the slope of the line stayed the same but

the intercept increased, what can you say about the amount by which ticket sales respond to

increases in ticket prices? LO8

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Chapter 01 Appendix

Answer:

Part a: The slope of this relationship tells us how much the price of a ticket must fall to

induce someone to buy an additional ticket. In this case, the slope of -2.5 tells us that the

Part b: If the slope of this line were steeper this would imply that the price must fall by

Part c: If the vertical intercept increased this would imply that individuals are willing to

APPENDIX REVIEW QUESTIONS

1. Indicate whether each of the following relationships is usually a direct relationship or

an inverse relationship. LO8

a. A sports team’s winning percentage and attendance at its home games.

b. Higher temperature and sweater sales.

c. A person’s income and how often they shop at discount stores.

d. Higher gasoline prices and miles driven in automobiles.

Answer:

Part a: direct relationship because winning reams are typically more popular.

Part b: inverse relationship because as higher temperatures people usually

purchase fewer sweaters

2. Erin grows pecans. The number of bushels (B) that she can produce depends on the

number of inches of rainfall (R) that her orchards get. The relationship is given

algebraically as follows: B = 3,000 + 800R. Match each part of this equation with the

correct term. LO8

Bslope

3,000 dependent variable

800 vertical intercept

Rindependent variable

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Sale of Umbrellas

Inches of Rainfall

Direct Relationship

Chapter 01 Appendix

Answer:

B goes with dependent variable.

APPENDIX PROBLEMS

1. Graph and label as either direct or indirect the relationships you would expect to find between

(a) the number of inches of rainfall per month and the sale of umbrellas, (b) the amount of tuition

and the level of enrollment at a university, and (c) the popularity of an entertainer and the price of

her concert tickets. LO8

Answer:

Part a:

Part b:

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Student Enrollment

Tuition

Inverse Relationship

Price of Concert Tickets

Popularity of the Entertainer

Direct Relationship

Chapter 01 Appendix

Part c:

Feedback: Consider the following situations:

Part a: The number of inches of rainfall per month and the sale of umbrellas: There is

likely a direct relationship between the number of inches of rainfall per month and the

sale of umbrellas (more rain implies more umbrellas).

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Sale of Umbrellas

Inches of Rainfall

Direct Relationship

Student Enrollment

Tuition

Inverse Relationship

Chapter 01 Appendix

Part b: The amount of tuition and the level of enrollment at a university: There is likely

an inverse relationship between the amount of tuition and the level of enrollment at a

university. As tuition increases less students will attend the university.

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Price of Concert Tickets

Popularity of the Entertainer

Direct Relationship

Chapter 01 Appendix

Part c: The popularity of an entertainer and the price of her concert tickets: There is likely

a direct relationship between the popularity of an entertainer and the price of her concert

tickets. The more popular the entertainer, the more people are willing to pay to see her in

concert.

2. Indicate how each of the following might affect the data shown in the table and graph in

Figure 2 of this appendix: LO8

a. GSU’s athletic director schedules higher-quality opponents.

b. An NBA team locates in the city where GSU plays.

c. GSU contracts to have all its home games televised.

Feedback: Consider the three scenarios:

Part a: GSU’s athletic director schedules higher-quality opponents. By scheduling higher

Part b: An NBA team locates in the city where GSU plays. If an NBA team locates in the

Part c: GSU contracts to have all its home games televised. If GSU contracts to have all

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Chapter 01 Appendix

3. The following table contains data on the relationship between saving and income. Rearrange

these data into a logical order and graph them on the accompanying grid. What is the slope of the

line? The vertical intercept? Write the equation that represents this line. What would you predict

saving to be at the $12,500 level of income? LO8

Answer:

Income per Year Saving per Year

0 -$500

$5,000 0

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Chapter 01 Appendix

Saving per Year

Slope equals (500/5000) or 0.10; the vertical intercept equals -$500. The equation

Feedback: Consider the following data:

Income per Year Saving per Year

$15,000 $1,000

0 -$500

To rearrange the above data into a meaningful order, we start with the lowest income and

saving pair. We then continue with sequentially higher values of both income and saving.

Income per Year Saving per Year

0 -$500

$5,000 0

Graphically, we have the following.

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Chapter 01 Appendix

Saving per Year

The slope of the saving line can be found by dividing the change in saving by the change

in income between any two points. For example we have the entry (5000 (income), 0

(savings)) and the entry (10000 (income), 500 (savings)). This implies that the change in

To find the predicted amount of saving for a given level of income we substitute the

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