microeconomics book solution 2a

# microeconomics book solution 2a -...

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Solution Appendix: Graphs in Economics 1. Study the four accompanying diagrams. Consider the following statements and indi- cate which diagram matches each statement. Which variable would appear on the horizontal and which on the vertical axis? In each of these statements, is the slope positive, negative, zero, or infinity? a. If the price of movies increases, fewer consumers go to see movies. b. More experienced workers typically have higher incomes than less experienced workers. c. Whatever the temperature outside, Americans consume the same number of hot dogs per day. d. Consumers buy more frozen yogurt when the price of ice cream goes up. e. Research finds no relationship between the number of diet books purchased and the number of pounds lost by the average dieter. f. Regardless of its price, Americans buy the same quantity of salt. 1. a. Panel (a) illustrates this relationship. The higher price of movies causes con- sumers to see fewer movies. The relationship is negative, and the slope is therefore negative. The price of movies is the independent variable, and the number of movies seen is the dependent variable. However, there is a convention in economics that, if price is a variable, it is measured on the vertical axis. So the quantity of movies is measured on the horizontal axis. Panel (c) illustrates this relationship. Since it is likely that their greater experience causes firms to pay workers more, years of experience is the independent variable and would go on the horizontal axis and the resulting income, the dependent variable, on the vertical axis. The slope is positive. Panel (a) Panel (b) Panel (c) Panel (d) S-23 2A chapter: S23-S32_Krugman2e_PS_Ch02A.qxp 9/16/08 9:18 PM Page S-23

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S-24 CHAPTER 2 APPENDIX GRAPHS IN ECONOMICS c. Panel (d) illustrates this relationship. With the temperature on the horizontal axis as the independent variable, and the consumption of hot dogs on the vertical axis as the dependent variable, we see there is no change in hot dog consumption whatever the temperature. The slope is zero. d. Panel (c) illustrates this relationship. When the price of ice cream goes up, this would cause consumers to choose a close alternative, frozen yogurt. The price of ice cream is the independent variable and the consumption of frozen yogurt is the dependent variable. However, there is a convention in economics that, if price is a variable, it is measured on the vertical axis. The quantity of frozen yogurt that consumers buy is on the horizontal axis. The slope is positive. e. Panel (d) illustrates this relationship. The fact that there is no discernable rela- tionship between the number of diet books purchased and the weight loss of the average dieter results in a horizontal curve. The slope is zero. f. Panel (b) illustrates this relationship. Although price is the independent variable and salt consumption the dependent variable, by convention the price appears on the vertical axis and the quantity of salt on the horizontal axis. Since salt con-
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microeconomics book solution 2a -...

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