A

For our income-consumption example, if C represents consumption (the dependent variable) and Y represents income (the independent variable), we can write C = a + bY. By substituting the known values of the intercept and the slope, we get

This equation also allows us to determine the amount of consumption C at any specific level of income. You should use it to confirm that at the $250 income level, consumption is $175.

When economists reverse mathematical convention by putting the independent variable on the vertical axis and the dependent variable on the horizontal axis, then y stands for the independent variable, rather than the dependent variable in the general form. We noted previously that this case is relevant for our IU ticket price-attendance data. If P represents the ticket price (independent variable) and Q represents attendance (dependent variable), their relationship is given by

where the vertical intercept is 50 and the negative slope is -2V2 or -2.5. Knowing the value of P lets us solve for Q, our dependent variable. You should use this equation to predict IU ticket sales when the ticket price is $15. (Key Appendix Question 3)

|FIGURE_A1-4

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