Fundamentals of Economics. Доловова Н.Н - 55 стр.

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five income-consumption combinations are plotted by drawing perpendiculars from
the appropriate points on the vertical and horizontal axes. For example, in plotting
point C— the $200 income - $150 consumption point - perpendiculars must be
drawn up from the horizontal (income) axis at $200 and across from the vertical
(consumption) axis at $150. These perpendiculars intersect at point C. which
locates this particular income-consumption combination. You should verify that
the other income-consumption combinations shown in Table 1 are properly lo-
cated in Figure 1. By assuming that the same general relationship between income
and consumption prevails at all other points between the five points graphed, a line
or curve can be drawn to connect these points.
Using Figure 1 as a benchmark, we can now make a number of additiona l
important comments.
Direct and inverse relationships
In this instance our upsloping line tells us that there is a direct
relationship between income and consumption. By a positive or direct
relat ionship we mean that the two variables—in this case consumption and
income—change in the same direction. An increase in consumption is associated
with an increase in income: conversely, a decrease in consumption is associated
with a decrease in income. When two sets of data are positively or directly related,
they will always graph as an upsloping line as
in Figure 1.
In contrast, two sets of data may be
inversely related. Consider Table 2, which
shows the relationship between the price of
basketball tickets and game attendance at
Gigantic State University. We observe a
negative or inverse relationship between
ticket prices and attendance: these two vari-
ables change in opposite directions. When
ticket prices decrease, attendance increases.
Conversely, when ticket prices increase,
attendance decreases.
Words to remember
to comprehend - понимать, постигать, осмысливать,
соображать
two-dimensional - дву(х)мерный; плоский; поверхностный
convenient - удобный, подходящий
variable – переменная (величина)

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