Table 8.3
-Refer to Table 8.3.Given the consumption schedule in the table above, the marginal propensity to consume is
A)0.1.
B)0.3.
C)0.6.
D)0.9.
E)1.0.

Question

Table 8.3 
-Refer to Table 8.3.Given the consumption schedule in the table above, the marginal propensity to consume is
A)0.1. 
B)0.3. 
C)0.6. 
D)0.9. 
E)1.0.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated as the change in consumption divided by the change in income. From the table (not visible here), if we see a consistent pattern where consumption increases by a certain fraction for every increase in income, and that fraction is high (but less than 1), 0.9 is a realistic value for MPC, indicating that for every additional dollar of income, consumption increases by 90 cents.

Table 8.3 -Refer to Table 8.3.Given the Consumption Schedule in the Table