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Plotting a Linear Relationship Between Two Variables
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To plot a linear relationship between two variables, use the algebraic
formula for a straight line in a plane: y = a + b (x).
The formula for the slope of a line is the change in the y-axis variable
divided by the change in the x-axis variable, called rise over run.
In economics, you can plot a simple
demand curve—the relationship
between the price of a good and the
quantity a consumer wants to buy at
each price. In this example, the
demand curve can be plotted from a
table showing how many hamburgers
Bob would buy each week at various
prices. The relationship described is a
linear relationship between two
variables because the plotted line is
straight.
From algebra, recall that the formula
for a straight line is: y = a + b (x),
where y is the price, a is the vertical
intercept, b is the slope of the line, and
x is the quantity.
This graph shows a behavioral
relationship because it describes Bob’s
consumption behavior.
The intercept of the line on the y-axis
is the price at which Bob buys zero
hamburgers.
The slope describes Bob’s behavior
when the price changes. It means that
Bob increases his consumption by one
hamburger for every $.50 decrease in
price.
You determine the slope by dividing
the change in the y variable by the
change in the x variable, or rise/run.
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1157.doc –rev 11/07/2006