Question

17. Consumption and Disposable Income: an economist wishes to estimate a line that relates personal consumption expenditures C and disposable income /. The following data points were obtained in a survey, where both Cand / are measured in thousands of dollars. $I$ (in thousands) 20 20 18 27 36 37 45 50 C (in thousands) 16 18 13 21 27 26 36 39 Let I be the independent variable and C be the dependent variable (a) On the graph paper, draw a scatter diagram by hand (b) Choose two points, and find the equation of the line that passes through those points (c) What does the slope of the line in (b) represent (it is called the \"marginal propensity to consume\" )? (d) Using the equation in (b), predict the consumption for a disposable income of $42,000

          17. Consumption and Disposable Income: an economist wishes to estimate a line that relates personal
consumption expenditures C and disposable income /. The following data points were obtained in a
survey, where both Cand / are measured in thousands of dollars.
\(I\) (in
thousands)
20
20
18
27
36
37
45
50
C (in
thousands)
16
18
13
21
27
26
36
39
Let I be the independent variable and C be the dependent variable
(a) On the graph paper, draw a scatter diagram by hand
(b) Choose two points, and find the equation of the line that passes through those points
(c) What does the slope of the line in (b) represent (it is called the \"marginal propensity to
consume\" )?
(d) Using the equation in (b), predict the consumption for a disposable income of $42,000

17. Consumption and Disposable Income: an economist wishes to estimate a line that relates personal
consumption expenditures C and disposable income /. The following data points were obtained in a
survey, where both Cand / are measured in thousands of dollars.
I (in
thousands)
20
20
18
27
36
37
45
50
C (in
thousands)
16
18
13
21
27
26
36
39
Let I be the independent variable and C be the dependent variable
(a) On the graph paper, draw a scatter diagram by hand
(b) Choose two points, and find the equation of the line that passes through those points
(c) What does the slope of the line in (b) represent (it is called the m̈arginal propensity to
consume)̈?
(d) Using the equation in (b), predict the consumption for a disposable income of 42,000

Added by Manuela M.

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