Answered: The variable shown on the vertical axis…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Ypsilanti Market Research conducted a survey to find out whether people who earn more money purchase more expensive goods. The following graph indicates the relationship between income the survey subjects earned and the price of the car that they purchased.

The variable shown on the vertical axis is __________ (options: thousands of dollars per car, thousands of dollars per year, income, thousands of dollars, price, number of goods).

The units for the variable on the horizontal axis are _________ (options: thousands of dollars per car, thousands of dollars per year, income, thousands of dollars, price, number of goods).

There are two ways to view the information presented on the graph. First, the graph tells us the amount a person with a certain income is likely to spend on a car, and second, it tells us the probable income of a person who spent a certain amount on a car. For example, if an individual earned $50,000 last year and purchased a new car, you would expect that person to have paid about __________(options: $17.50, $12500, $17500, $12.50, $23) for the car. Similarly, if someone just paid $20,000 for a car, you could use this graph to estimate that this person's income was probably around ___________ (option: $60 per year, $60000, $60000 per year, $65, $60, $65000).