As AX further decreases, slope of the line connecting two points of the non-linear curve will further decline. dependent variable a variable that is affected by some other variable in a model. For example, it is important to know the rate at which quantity demanded of a commodity changes in response to a change in price of a commodity. The dependent variable is the condition that you measure in an experiment. In the function (1) Y is known as the dependent variable and X is the independent variable. Let us first take the slope of a linear function. Scenarios 1 Coach Jones has noticed that her players tend to shoot a higher percentage from the free throw line when they play away, rather than at home. Share Your Word File At point A, value of X is 1 and the corresponding value of Y is 9 and at point B, the value of X is 4 to which the corresponding value is 33. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. Share Your PPT File, Differentiation Calculus: Concept and Rules of Differentiation | Optimisation Technique. Thus a is Y intercept. Let us take the following specific quadratic function: In Table 5.2 we have calculated the various values of Y by taking different values of X (0, 1, 2, 3, etc.). A = advertising expenditure incurred by the firm. Thus in function (1) Y is called the dependent variable and its value depends on the value of X Further, the independent variable is Interpreted as the cause and the dependent variable as the effect. That is, a function expresses dependence of one variable on one or more other variables. It is worth noting that slope of the demand function curve in Figure 5.1 will represent ∆P/ ∆Q. Thus, the slope of the function (Y=2 + 0.5X) is: This implies that value of Y increases by 0.5 when value of X increases by 1. If a equals 7 and b equals 0.5, the linear demand function can be expressed in the following specific form: The above specific demand function shows that a unit fall in price of the commodity will cause 0.5 units increase in the quantity demanded of the commodity. Privacy Policy | Terms of Use | Disclaimer | Contact Us, https://glossary.econguru.com/economic-term/dependent+variable. An important function which is extensively used in economics is a demand function which expresses quantity … A widely used mathematical form of a function is a linear function. are raised to the first power only. Between two points A and C, ∆X = 3 – 1 = 2 and ∆Y = 23 – 9 = 14, Thus, the slope of straight line AC is, In a similar fashion, the slope of the straight line AD connecting points A and D on the non-linear quadratic function curve in Figure 5.5 is given by. In the function (1) Y is known as the dependent variable and X is the independent variable. It should be compared with an exogenous variable this is the "input" of the model. It is worth noting that slope of the curve of convex quadratic functions as is evident from U-shaped graph in this case where coefficient of X2 is positive, slope is increasing everywhere. When there are more than one independent variable such as X1, X2, and they have a quadratic relationship with the dependent variable Y, such a function is called multivariable quadratic function. Permalink: https://glossary.econguru.com/economic-term/dependent+variable, © 2007, 2008 Glossary.EconGuru.com. Content Guidelines 2. « demographic variables | deposit ». You are assessing how it responds to a change in the independent variable, so you can think of it as depending on the independent variable. The exact nature of relation of dependent variable with the independent variables can be known from the specific form of the function. In economics the effect of variables other than the own price of a commodity in the demand function are depicted by shifts in the demand curve. That is, if price of a commodity falls, its quantity demand increases and vice versa. The form of quadratic function depends on the sign of the coefficient c of X2. The linear demand function with price as the only independent variable is written as: The minus sign before coefficient b indicates that quantity demanded of a commodity is negatively related with price of the commodity. Term dependent variable Definition: A variable that is identified within the workings of the model. Thus, here ∆X = 4 – 1 = 3 and ∆y = 33 – 9 = 24. It was 8 of the line AB 7 of the line AC and 6 of the line AD. On the other hand, if coefficient of X2 is negative (c < 0), that is, when Y= a + bX- cX2 then we have concave quadratic function because its graphs is of inverted ᴒ- shape (i.e. Dichotomous outcomes are the most common type of discrete or qualitative dependent variables analyzed in economics. It should be noted that, contrary to mathematical practice, by convention in economics to represent demand function we show the independent variable (price in the above case of demand function) on the y-axis and the dependent variable (the quantity demanded in the present case) on the x-axis. Disclaimer Copyright, Share Your Knowledge Also termed an endogenous variable, a dependent variable is in essence the "output" of the model. Therefore, the slope at a point on the non-linear function curve can be measured by the slope of a tangent drawn to the curve at that point. Further, in this function b is the coefficient of X and measures change in Y due to change in X that is, ∆Y/∆X. 5.4. In economics power functions of the quadratic and cubic forms are extensively used. Thus. Again note that in economics we write ’causes’ as the independent variables and ‘effect’ as the dependent variable. Similarly, slope of straight line AC in Fig.5.5. Privacy Policy3. In economics it is important to know the rate at which a variable changes in response to a change in another variable, the slope of a variable measures this rate. However, when the signs of various coefficients differ in the cubic function, that is, some have positive signs and some have negative signs, then the graph of the function may have both convex and concave segments depending on the values of the coefficients. It should also be noticed that the slope of the straight line AD connecting points and D is very close to the slope of the tangent drawn to the curve at point As AX becomes smaller and smaller slope of the line connecting the two points on a curve will become extremely close to the slope of the tangent drawn to the curve at point A. Further, we have plotted the different values of Table 5.1 on a graph shown in Fig. The specific form of a unction can take a variety of mathematical forms. It will be seen from this linear function that when the value of X is zero, the value of Y will be equal to a. This implies shifting of the demand curve to the right. If price (P) is zero, the second term (0.5P) in the demand function drops out and the quantity demanded is equal to 7. The values of constants a and b determine the specific nature of a linear function. We can take various values of P and find out different quantities (Qd) of a commodity demanded at them. Note that parameters of a function are variables that are fixed and given in a specific function. can be measured. It should be further noted that in analytical geometry it is proved that graph of any quadratic function is a parabola which may be either convex or concave. The linear multivariate function is written in the following form: In this function the coefficients 0.4, 0.2, 0.3 and 0.5 show the precise impact of the independent variables X1, X2, X3, X4 on the dependent variable Y. Note that power is also referred to as exponent A quadratic function may be written as. For example, demand for a product is generally considered to be a function of its own price prices of other commodities (which may be substitutes or complements) income of the consumers, tastes and preferences of the consumers and advertising expenditure made by a firm to promote its product. The linear functions stated above are known as first degree functions where the independent variables X1, X2, X3, etc. A function describes the relation between two or more than two variables. A cubic function may have the following form: a is the intercept term, the dependent variable X has the first degree, second degree and third degree terms. Similarly, supply function of a commodity X is expressed as: When the value of the variable Y depends on more than two variables X1, X2….. Xn this function is written in general form as: This shows the variable Y depends on several independent variables X1, X2……Xn where n is the number of independent variables. The slope of the function, (Y = 2 + 0.5X) between two points, say, A and B in Figure 5.4 is given by the ratio of change in Y to the change in X. For example, at point A of the given function value of variable X is 3 and corresponding to it the value of variable Vis 3.5. 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A third degree Terms Use | Disclaimer | Contact Us, https dependent variable in economics //glossary.econguru.com/economic-term/dependent+variable ©! As the dependent variable is the `` input '' of the demand function is a linear.... Connecting two points of the consumers increases consumers will demand more of the consumer for the.. © 2007, 2008 Glossary.EconGuru.com commodity demanded at them – 9 = 24 Policy | Terms of Use Disclaimer! Online platform to help students to discuss anything and everything about economics curve to right... Function, Y = a + bX + cX2, where the independent variables and ‘ effect ’ as independent. That in economics dependent variable in economics functions of the model that are fixed and given a. A quadratic function may be written as side of an EQUATION linear and non­linear functions more other variables specific... Qualitative dependent variables analyzed in economics power functions of the consumer for the.... Income ( M ) of a function is constant throughout publishing your articles this... To 4, value of X rises from 3 to 4, value Y.

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