The field of economics is traditionally divided into two broad subfields. Microeconomics is the study of how households and firms make decisions and how they interact in specific markets. Macroeconomics is the study of economywide phenomena, including inflation, unemployment, and economic growth.
DEMAND CURVE
The demand curve shows how the quantity of a good demanded depends on the price. According to the law of demand, as the price of a good falls, the quantity demanded rises. Therefore, the demand curve slopes downward.
CALCULATING THE SLOPE OF A LINE. To calculate the slope of the demand curve, we can look at the changes in the x- and y-coordinates as we move from the point Ex. (21 novels, $6) to the point (13 novels, $8). The slope of the line is the ratio of the change in the y-coordinate (-2) to the change in the x-coordinate (+8), which equals -1/4.
The slope of a line is the ratio of the vertical distance covered to the horizontal distance covered as we move along the line. This definition is usually written out in mathematical symbols as follows.
slope = Δy
___
Δx
[first y-coordinate - second y-coordinate = Δy , first x-coordinate - second x-coordinate = Δx]
With a graph like the demand curve, there is no doubt about cause and effect. Because we are varying price and holding all other variables constant, we know that changes in the price caus
e changes in the quantity someone demands.