Ure A3

DemenU, 0, novels rails to $7, Emma will increase her purchases of novels to 17 per year. I he demand curve, however, stays fixed in the same place. Emma still buys the same number of novels uf ettch price, but as the price falls, she moves along her demand curve fnim left to right. By contrast, if the price of novels remains fixed at but her income rises to $40,000, Emma increases her purchases of novels from 13 to 16 per year. Because Emma buys more novels at each price, her demand curve shifts out, as shown in Figure A-4.

There is a simple way to tell when it i> necessary to shift a curve: tVftfn it variable that is not named on either axis changes, the carry ships. Income is on neither the .»-axis nor the y^ixis of the graph, so when Emma's income changes, her demand curve must shift. The same is true for any change that affects Emma's purchasing habits besides a change in the price of novels- If, for instance, the public library closes and Emma must buy all the books she wants to read, she will demand more novels at each price, and her demand curve will shift to the right. Or if the price of movies falls and Emma spends more time at the movie» and less time reading, she will demand fewer novels at each price, and her demand curve will shift to the left. By contrast, when a variable on an axis of the graph changes, the curve does not shift. We read the change as a movement along the curve.


One question we might want to ask about Emma is how much her purchasing habits respond to price. Look at the demand curve pictured in Figure A-5. If this curve b very steep, Emma purchases nearly the same number of novels regardless of whether they are cheap or expensive. If thb curve b much flatter, Emma purchases many fewer novels when the price rises- To answer questions about how much one variable responds to changes in another variable, we can use the concept of slope.

I he slope of a line is the ratio of the vertical distance covered to the horizontal distance covered as we move along the line. This definition is usually written out in mathematical symbols as follows:

i where the Greek letter A (delta) stands for the change in a variable. In other words, the slope of a line is equal to the "rise" (change in y) divided by the "run" (change in .*). The slope will be a small positive number for a fairly flat upward-sloping line, a large positive number for a steep upward-sloping line, and a negative number for a downward-sloping line. A horizontal line has a slope of zero because in this case the y-variable never changes; a vertical line is said to have an infinite slope because the y-variable can lake any value without the x-var table changing at all.

What is the slope of Kmma's demand curve for novels? hirst of all, because the curve slopes down, we know the slope will be negative. To calculate a numerical value for the slope, we must choose two points on Ihe line. With Emma's income at $30.0<X), she will purchase 21 novels at a price of $ñ or 13 novels at a price of S8. When we apply the slope formula, we are concerncd with the change between these two points; in other words, we are concerned with the difference between

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