200 300 Income (Y)


Two sets of data that are positively or directly related, such as consumption and income, graph as an upsloping line.

Dependent and Independent Variables

Although it is not always easy, economists seek to determine which variable is the "cause" and which is the "effect." Or, more formally, they seek the independent variable and the dependent variable. The independent variable is the cause or source; it is the variable that changes first. The dependent variable is the effect or outcome; it is the variable that changes because of the change in the independent variable. As noted in our income-consumption example, income generally is the independent variable and consumption the dependent variable. Income causes consumption to be what it is rather than the other way around. Similarly, ticket prices (set in advance of the season) determine attendance at IU basketball games; attendance at games does not determine the

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