By Ron Taber
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C. proﬁts will fall. d. unemployment will rise. APPENDIX Applying Graphs to Economics 1 Economists are famous for their use of graphs. ” Graphs are used throughout this text to present economics models. By drawing a line, you can use a two-dimensional illustration to analyze the effects of a change in one variable on another. You could describe the same information using other model forms, such as verbal statements, tables, or equations, but a graph is the simplest way to present and understand the relationship between economic variables.
Each of us has individual subjective preferences that we apply to a particular subject. An animal rights activist says that no one should purchase a fur coat. ” Conclusion When opinions or points of view are not based on facts, they are scientiﬁcally untestable. When considering a debate, make sure to separate the arguments into their positive and normative components. This distinction allows you to determine if you are choosing PART 1 ECONOMICS IN PRACTICE Does Raising the Minimum Wage Help the Working Poor?
The location of each curve on the graph, however, depends on the annual income of consumers. As the annual income variable increases from $30,000 to $60,000 and consumers can afford to pay more, the price-quantity demanded curve shifts rightward. 3 I N T R O D U C I N G T H E E C O N O M I C WAY O F T H I N K I N G An Independent Relationship between Variables The ﬂat line with a zero slope shows that the expenditure per year for toothpaste is unrelated to annual income. As annual income increases along the horizontal axis, the amount spent each year for toothpaste remains unchanged at 20 units.