Use the figure below to answer the following question.
Figure 11.5.1
This figure describes the relationship between consumption expenditure and disposable income.
-Refer to Figure 11.5.1.The equation of the consumption function is
A)C = 100 + 0.8YD.
B)C = 500 + 0.8YD.
C)C = 100 + 0.2YD.
D)C = 100 + 0.6YD.
E)C = 100 + 0.8Y.

Question

Use the figure below to answer the following question.
  Figure 11.5.1
This figure describes the relationship between consumption expenditure and disposable income.
-Refer to Figure 11.5.1.The equation of the consumption function is
A)C = 100 + 0.8YD. 
B)C = 500 + 0.8YD. 
C)C = 100 + 0.2YD. 
D)C = 100 + 0.6YD. 
E)C = 100 + 0.8Y.

Quizplus · Accepted Answer

The consumption function can be found by drawing a line that connects the points where the vertical line intersects with the consumption expenditure line. The equation for this line is C = intercept + slope(YD). From the figure, the intercept is 100 and the slope is 0.8, thus the equation of the consumption function is C = 100 + 0.8YD.

Use the Figure Below to Answer the Following Question