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Microeconomics 18th Edition by Campbell McConnell, Stanley Brue, Sean Flynn
Edition 18ISBN: 9780073365954Microeconomics 18th Edition by Campbell McConnell, Stanley Brue, Sean Flynn
Edition 18ISBN: 9780073365954 Exercise 2
Suppose that C = a + bY , where C = consumption, a = consumption at zero income, b = slope, and Y = income.
a. Are C and Y positively related or are they negatively related
b. If graphed, would the curve for this equation slope upward or slope downward
c. Are the variables C and Y inversely related or directly related
d. What is the value of C if a =10, b =.50, and Y = 200
e. What is the value of Y if C = 100, a = 10, and b =.25
a. Are C and Y positively related or are they negatively related
b. If graphed, would the curve for this equation slope upward or slope downward
c. Are the variables C and Y inversely related or directly related
d. What is the value of C if a =10, b =.50, and Y = 200
e. What is the value of Y if C = 100, a = 10, and b =.25
Explanation
Verified
Verified
Two variables are positively or directly related when their values changes in the same direction. The line (curve) representing two directly related variables slope upward.
Two variables are negatively or inversely related when their values changes in opposite directions. The line (curve) representing two negatively related variables slope downward.
The equation given is:
a. In the above equation, Consumption and income are positively or directly related because higher income brings higher consumption.
b. If the graph is drawn for the above equation, then, the curve will slope upward because the two variables are positively related.
c. Here, consumption and income are positively or directly related because higher income brings higher consumption.
d. a = 10, b = 0.50, and Y = 200
We can find out the value of consumption by substituting the above given values into the equation:
e. C = 100, a= 10, and b =0.25
Similarly, we can find out the value of income by substituting the values above into the equation:
Two variables are negatively or inversely related when their values changes in opposite directions. The line (curve) representing two negatively related variables slope downward.
The equation given is:
a. In the above equation, Consumption and income are positively or directly related because higher income brings higher consumption.b. If the graph is drawn for the above equation, then, the curve will slope upward because the two variables are positively related.
c. Here, consumption and income are positively or directly related because higher income brings higher consumption.
d. a = 10, b = 0.50, and Y = 200
We can find out the value of consumption by substituting the above given values into the equation:
e. C = 100, a= 10, and b =0.25Similarly, we can find out the value of income by substituting the values above into the equation:
Microeconomics 18th Edition by Campbell McConnell, Stanley Brue, Sean Flynn
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