Homework Sheet 0

HOMEWORKSHEET 0: GRAPHS IN ECONOMICS
Section 1: True/False
1. The origin is the point where a graph starts. ANS) TRUE
2. A graph showing a positive relationship between stock prices and the nation’s production
means that an increase in stock prices causes an increase in production. Ans) True
3. In Figure A1.6 the value of y decreased between 1998 and 1999.Ans) True
4. In Figure A1.6 the value of y increased most rapidly between 2001 and 2002. Ans) False
5. Figure A1.6 shows a trend with y increasing, generally speaking. Ans) True
6. A cross-section graph compares the values of different groups of a variable at a single point
in time. Ans) True
7. If the graph of the relationship between two variables slopes upward to the right, the
relationship between the variables is positive. Ans) True
8. The slope of a straight line is calculated by dividing the change in the value of the variable
measured on the horizontal axis by the change in the value of the variable measured on the
vertical axis. Ans) False
9. The amount of corn a farmer grows depends on its price and the amount of rainfall. The
curve showing the relationship between the price of a bushel of corn and the quantity grown
is the same curve regardless of the amount of rainfall. Ans) False
10. The slope of a curved line is not constant. Ans) True
Section 2: MCQs
1. Demonstrating how an economic variable changes from one year to the next is best
illustrated by a
a. one-variable graph.
1
b. time-series graph.
c. linear graph.
d. cross-section graph.
Ans) Time Series Graph
2. You believe that the total amount of goods produced in the United States has generally
increased. In a time-series graph illustrating the total amount produced, you expect to
find
a. an upward trend.
b. no relationship between time and the amount of goods produced.
c. an inverse relationship between time and the amount of goods produced.
d. a linear relationship.
Ans) an Upward Trend
3. If variables x and y move up and down together, they are

a. positively related.
Z b. negative related.
c. unrelated.
Ans)Positively related
4. The term “direct relationship” means the same as
a. correlation.
b. trend.
c. positive relationship.
d. negative relationship
Ans) Positive Relationship
5. The relationship between two variables, x and y, is a vertical line. Thus x and y are
a. positively correlated.
b. negatively correlated.
c. not related.
d. falsely related.
Ans) Not Related
6. The slope of a negative relationship is
a. negative.
b. undefined.
c. positive to the right of the maximum point and negative to the left.
d. constant as long as the relationship is nonlinear.
Ans) Negative Related
7. In Figure A1.7 when income equals $20,000, what does consumption equal?
a. $0
b. $10,000
c. $20,000
d. Impossible to tell
Ans) $20,000
8. The relationship between income and consumption illustrated in Figure A1.7 is
a. positive and linear.
2
b. positive and nonlinear.
c. negative and linear.
d. negative and nonlinear
Ans) Positive and Linear
9. A linear relationship
a. always has a maximum.
b. always has a constant slope.
c. always slopes up to the right.
d. never has a constant slope.
Ans) Always has a constant slope
10. Figure A1.8 shows
a. positive relationship.
b. time-series relationship.
c. negative relationship.
d. no relationship between the variables.
Ans) Negative Relationship
3
11. In Figure A1.9 the slope across the arc between points a and b equals
a. 5.
b. 4.
c. 2.
d. 1.
ANS) 2
12. In Figure A1.10, between x = 2 and x = 3, what is the slope of the line?
a. 1
b. –1
c. 2
d. 3
Ans) a) 1
13. In Figure A1.10 how does the slope of the line be-tween x = 4 and x = 5 compare with the
slope be-tween x = 2 and x = 3?
a. The slope is greater between x = 4 and x = 5.
b. The slope is greater between x = 2 and x = 3.
c. The slope is the same.
d. The slope is not comparable.
Ans) The Slope is the same
SECTION III
1. a. Bobby says that he buys fewer compact discs when the price of a compact disc is
higher. Bobby also says that he will buy more compact discs after he graduates and
his income is higher. Is the relationship between the number of com-pact discs
Bobby buys and the price positive or negative? Is the relationship between Bobby’s
income and the number of compact discs positive or negative?
TABLEA1.3
Price Quantity of Quantity of

compact
(dollars per discs compact discs
compact purchased, purchased,
disc) low high
income Income
$11 5 6
12 4 5
4
13 3 4
14 1 3
15 0 2
b. Table A1.3 shows the number of compact discs Bobby buys in a month at different
prices when his income is low and when his income is high. On a diagram with
price on the vertical axis and the quantity purchased on the horizontal axis, plot the
relationship between the number of discs purchased and the price when Bobby’s
in-come is low. On the same diagram, draw the relationship be-tween the number
of discs purchased and the price when Bobby’s income is high.
c. Does an increase in Bobby’s income cause the relationship between the price of a
compact disc and the number purchased to shift rightward or leftward?
2. The distance travelled per day depends on the number of hours driven per day,
assuming an average speed of 50 miles per hour. This table shows combinations of
hours driven and distance travelled.
Hours driven per Distance travelled per day
day (miles)
1 50
2 100
3 150
4 200
5 250
a. Identify the dependent and independent variable
b. Plot the given information.
c. Does it exhibit positive or negative relation?
d. Find out the slope of the line.
e. Interpret the slope.
f. Write the equation for this relation.
3. Draw graph of the following relationship: Y = -100 + 4X, where Y is on the vertical
axis and X is on the horizontal axis. Also find the slope.
4.Potray the following hypothetical data on a two variable diagram:
Academic Year Total Enrolment Enrollment in

Economics
1994-95 3000 300

1995-1996 3100 325
1996-1997 3200 350
1997-1998 3300 375
5
1998-1999 3400 400
Measure the slope of the resulting line, and explain what this number means.

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HOMEWORKSHEET 0: GRAPHS IN ECONOMICS

Ans) an Upward Trend

3. If variables x and y move up and down together, they are

Price Quantity of Quantity of

4.Potray the following hypothetical data on a two variable diagram:

Academic Year Total Enrolment Enrollment in

1994-95 3000 300

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