Assume a consumption function of the following form: C = 100 + .8Y. If income is equal to $3,000, then consumption is
A) $2,400.
B) $2,500.
C) $2,900.
D) $3,100.

Name: Assume a consumption function of the following form: C = 100 + .8Y. If income is equal to $3,000, then consumption is A) $2,400. B) $2,500. C) $2,900. D) $3,100.
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Question

Quizplus · Accepted Answer

We can plug in the given value of income into the consumption function to get:

C = 100 + .8(3000)
C = 100 + 2400
C = 2500

Therefore, consumption is $2,500.

Assume a Consumption Function of the Following Form: C =