There are many real life situations in which two variables are related through a linear equation. Some examples from those used in schools:
Temperature in Celsius and Fahrenheit scales
Manufactrunig costs as fixed costs plus unit costs
Cab fares as fixed amount plus distance-related amount
Workmen charges as call out plus hourly rate
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Equations are not linear when they are quadratic equations which are graphed in the form of a parabola
They are not. A vertical line is not a function so all linear equations are not functions. And all functions are not linear equations.
Linear equations are a small minority of functions.
Most functions are not like linear equations.
No, linear equations don't have x2. Equation with x and y are usually linear equations. Equations with either x2 or y2 (but never both) are usually quadratic equations.