The marginal propensity to consume can be found by dividing
A)Total consumption by total saving.
B)Total consumption by the number of people consuming.
C)The change in total consumption by the change in disposable income.
D)Disposable income by total consumption.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of each additional dollar of disposable income that is spent on consumption. It can be found by dividing the change in total consumption by the change in disposable income. Thus, option C is the correct answer. Option A is incorrect because it divides total consumption by total saving, which does not provide information on how consumption changes with changes in disposable income. Option B is incorrect because it calculates the average consumption per person, which is not the same as MPC. Option D is also incorrect because it divides disposable income by total consumption, which is not the same as MPC.

The Marginal Propensity to Consume Can Be Found by Dividing