How Can the Influence of a Third Variable Be Shown

question 59

Multiple Choice

How can the influence of a third variable be shown on a two-dimensional graph?

• A)by allowing the relationship to be nonlinear
• B)by allowing the position of the relationship line or curve to shift on the graph
• C)by drawing a third axis coming out of the two axes
• D)by super-imposing the third variable on the two-dimensional graph

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Definitions:

Income Elasticity

A measurement of how the demand for a good or service changes in response to changes in consumers' income levels.

Recession

A period of economic decline across an economy lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Demand

Refers to the desire and willingness of consumers to purchase goods and services at different prices.

Income Elasticity of Demand

An indicator of the variation in the demand for a product as a result of changes in the income levels of consumers.