$$\begin{array} { c c }
\begin{array} { c }
\text { Disposable income } \
\text { (trillions of 2005 dollars) }
\end{array} & \begin{array} { c }
\text { Consumption expenditure } \
\text { (trillions of 2005 dollars) }
\end{array} \
\hline 0.0 & 1.5 \
2.0 & 3.0 \
4.0 & 4.5 \
6.0 & 6.0 \
8.0 & 7.5 \
\hline
\end{array}$$
-The above table has data from the nation of Atlantica.Based on these data, what is marginal propensity to consume?
A) 0.75
B) 0.50
C) 1.33
D) 1.00
E) 1.50

Question

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Disposable income } \
\text { (trillions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Consumption expenditure } \
\text { (trillions of 2005 dollars) }
\end{array} \
\hline 0.0 & 1.5 \
2.0 & 3.0 \
4.0 & 4.5 \
6.0 & 6.0 \
8.0 & 7.5 \
\hline
\end{array}$$
-The above table has data from the nation of Atlantica.Based on these data, what is marginal propensity to consume?
A) 0.75
B) 0.50
C) 1.33
D) 1.00
E) 1.50

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated as the change in consumption divided by the change in disposable income. From the table, as disposable income increases from 2.0 to 4.0 trillion dollars, consumption increases from 3.0 to 4.5 trillion dollars. Thus, MPC = (4.5 - 3.0) / (4.0 - 2.0) = 1.5 / 2.0 = 0.75.

-The Above Table Has Data from the Nation of Atlantica