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PS1&Answers - METU Department of Economics Econ 101...

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1 METU Department of Economics Econ 101 Introduction to Economics I All sections 2009-2010 Fall Semester PROBLEM SET # 1 (With Answers) (APPENDIX of CHAPTER 1 ) PART A: SHORT QUESTIONS 1. (1) z = a + by (2) z = a by where y and z are variables; a and b are constants . For the equations above; a. Define the dependent variables: Dependent variable is ‘z’ for both (1) and (2) b. Define the independent variables: Independent variable is ‘y’ for both (1) and (2) c. Show the intercept and slope terms and interpret them: For (1): a is the intercept term. This means that when y is 0, z is a. b is the slope term. This means that for every one unit increase in y, there is b unit increase in z . For (2): a is the intercept term. This means that when y is 0, z is a. b is the slope term. This means that for every one unit increase in y, there is b unit decrease in z .
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2 2. For each of the following equations, graph the line and calculate its slope. a. P = 10 2 q D ( Put q D on the X-axis) b. P = 100 4 q D ( Put q D on the X-axis) c. P = 50 + 6 q S ( Put q S on the X-axis) d. I = 10,000 500 r ( Put I on the X-axis) Slope = -2 Slope = -4 Slope = +6 Slope = - 0.002 3. Write the equations of the linear functions whose graph a. has slope 2 and intercept (0, 3) y = 3 + 2x b. has slope -3 and intercept (0, 0) y = 3x c. has slope 4 and passes through the point (1, 1) y = -3 + 4x d. has slope -2 and passes through the point (2, -2) y = 2 2x e. passes through the points (2, 3) and (4, 5) y = x + 1 5 q D 25 q D 5 10 q s 10.000 I P P P r 100 110 10 80 20 50
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3 4. For each of the graphs in the figure below, say whether the curve has a positive or negative slope.
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