Inverse relationship definition economics

Variation, Direct and Inverse |

inverse relationship definition economics

An inverse relationship in economics is a relationship in which an increase in one variable corresponds with a decrease in another variable. The law of demand. Two types of relationships between variables are direct and inverse variation. In general, direct variation suggests that two variables change in the same. Definition of inverse relationship: A relationship between two numbers in which an increase in the value of one number results in a decrease in the.

inverse relationship definition economics

Whether there is another variable in the situation is irrelevant. In other words, inverse relationships may be either indirect or direct relationships. There may be three or just two variables present. It reported last week that the sales of diet products had increased. At the same time, sales of candy and chocolate had declined.

Inverse and Direct relationships

Sometimes, it happened the other way round. Interest rates and the inflation rate have an inverse relationship. In this context, interest rate refers to the rate at which the central bank lends to financial institutions.

inverse relationship definition economics

Inflation occurs when overall prices in an economy rise. Indirect relationship All this means is that one variable affects the another but through a third variable.

What is an indirect relationship? Definition and examples

They do not affect each other directly. However, Group A does not affect Group C directly. So, what if one variable affects another variable through a third variable, and they both move in the same direction? In that case, there is an indirect but not inverse relationship. Therefore, they communicated through an interpreter. We can say that the two presidents had an indirect relationship. If one variable doubles, the other doubles; if one triples, the other triples; if one is cut in half, so is the other.

In the preceding example, the equation is y 12x, with x representing the number of hours worked, y representing the pay, and 12 representing the hourly rate, the constant of proportionality.

What is an Inverse Relationship?

Graphically, the relationship between two variables that vary directly is represented by a ray that begins at the point 0, 0 and extends into the first quadrant. In other words, the relationship is linear, considering only positive values. See part a of the figure on the next page. The slope of the ray depends on the value of k, the constant of proportionality.

The bigger k is, the steeper the graph, and vice versa.

Variation, Direct and Inverse

Inverse Variation When two variables vary inversely, one increases as the other decreases. As one variable is multiplied by a given factor, the other variable is divided by that factor, which is, of course, equivalent to being multiplied by the reciprocal the multiplicative inverse of the factor.

inverse relationship definition economics

For example, if one variable doubles, the other is divided by two multiplied by one-half ; if one triples, the other is divided by three multiplied by one-third ; if one is multiplied by two-thirds, the other is divided by two-thirds multiplied by three-halves. Consider a situation in which miles are traveled. If traveling at an average rate of 5 miles per hour mphthe trip takes 20 hours.

  • inverse relationship

If the average rate is doubled to 10 mph, then the trip time is halved to 10 hours. If the rate is doubled again, to 20 mph, the trip time is again halved, this time to 5 hours. If the average rate of speed is 60 mph, this is triple 20 mph. Therefore, if it takes 5 hours at 20 mph, 5 is divided by 3 to find the travel time at 60 mph.

inverse relationship definition economics

In general, variables that vary inversely can be expressed in the following forms: The graph of the relationship between quantities that vary inversely is one branch of a hyperbola. See part b of the figure. The graph is asymptotic to both the positive x -and y -axes.