Appendix to Chapter 1

Practice Quiz
Applying Graphs to Economics
1. Straight line CD in Exhibit A-7 shows that
a. increasing the value of X will increase the value of Y.
b. decreasing the value of X will decrease the value of Y.
c. there is a direct relationship between X and Y.
d. all of the above.
ANS:
d. As the value of X increases, the value of Y increases, and vice versa; this is called a
direct relationship.

2. In Exhibit A-7, the slope of straight line CD is

a. 3.
b. 1.
c. -1.
d. 1/2.
ANS:
d. The slope of a line is measured by the rise over the run, or a change in vertical divided
by a change in the horizontal. For example, as Y increases from 5 units to 15, X increases
from 0 to 20. The slope is 10 divided by 20.
3. In Exhibit A-7, the slope of straight line CD is
a. positive.
b. zero.
c. negative.

d. variable.
ANS:
a. When both X and Y move in the same direction, it is said that they are directly related
to one another.
4. Straight line AB in Exhibit A-8 shows that
a. increasing the value of X reduces the value of Y.
b. decreasing the value of X increases the value of Y.
c. there is an inverse relationship between X and Y.
d. all of the above are true.
ANS:
d. When the value of X decreases, the value of Y increases and vice versa; this shows a
direct relationship between X and Y.

5. As shown in Exhibit A-8, the slope of straight line AB

a. decreases with increases in X.
b. increases with increases in X.
c. increases with decreases in X.
d. remains constant with changes in X.
ANS:
d. The slope of a straight line stays the same between the two points on the line.
6. In Exhibit A-8, the slope of straight line AB is
a. 3.
b. 1.
c. -1.
d. -5.

ANS:
c. There is a one to one inverse ratio between a change in X and a change in Y. For
example, as Y decreases from 20 units to 0, X increases from 0 to 20. The slope is -20
divided by 20.
7. A shift in a curve represents a change in
a. the variable on the horizontal axis.
b. the variable on the vertical axis.
c. a third variable that is not on either axis.
d. any variable that is relevant to the relationship being graphed.
ANS
c. A shift occurs when something changes other than the price.
8. A change in a third variable not on either axis of a graph is illustrated by a
a. horizontal or vertical line.
b. movement along a curve.
c. shift of a curve.
d. point of intersection.
ANS:
c. When price changes the movement is always along a stationary curve. When
something changes other than price, the whole curve shifts.
9. What is used to illustrate an independent relationship between two variables?
a. An upward sloping curve.
b. A downward sloping curve.
c. A hill-shaped curve.
d. A horizontal or vertical line.
ANS:
d. As the value of X increases, the value of Y remains unchanged.
10. When an inverse relationship is graphed, the resulting line or curve is:
a. horizontal.
b. vertical.
c. upward sloping.
d. downward sloping.
ANS:
d. As the value of X increases, the value of Y decreases.

11. Which of the following pairs is the most likely to exhibit an inverse relationship?
a. The amount of time you study and your grade point average
b. Peoples annual income and their expenditure on personal computers
c. Baseball payers salaries and their batting average
d. The price of a concert and the number of tickets people purchase
ANS:
d. As the ticket price falls, people can afford to purchase more tickets.
12. Which of the following pairs is the most likely to exhibit a direct relationship?
a. The price of gasoline and the amount of gasoline that people purchase
b. Cholesterol levels and the likelihood of developing heart disease
c. Outdoor temperature and heating oil sales
d. Annual income and weekly pawn shop visits
ANS:
b. Higher cholesterol levels develop plaque in blood vessels and contributes to heart
disease.