(Table) The table shows data on consumption at various levels of income. The value of the marginal propensity to save is: $$\begin{array} { | c | c | }
\hline \text { Income } & \text { Consumption } \
\hline \$ 0 & \$ 250 \
\hline \$ 500 & \$ 700 \
\hline \$ 1,000 & \$ 1,150 \
\hline \$ 1,500 & \$ 1,600 \
\hline \$ 2,000 & \$ 2,050 \
\hline \$ 2,500 & \$ 2,500 \
\hline
\end{array}$$
A) 0.1.
B) 0.25.
C) 0.75.
D) 0.9.

Question

(Table) The table shows data on consumption at various levels of income. The value of the marginal propensity to save is: $$\begin{array} { | c | c | } 
\hline \text { Income } & \text { Consumption } \
\hline \$ 0 & \$ 250 \
\hline \$ 500 & \$ 700 \
\hline \$ 1,000 & \$ 1,150 \
\hline \$ 1,500 & \$ 1,600 \
\hline \$ 2,000 & \$ 2,050 \
\hline \$ 2,500 & \$ 2,500 \
\hline
\end{array}$$
A) 0.1.
B) 0.25.
C) 0.75.
D) 0.9.

Quizplus · Accepted Answer

The marginal propensity to save is the change in saving divided by the change in income. In this case, the change in saving is $50 ($2,500 - $2,500) and the change in income is $500 ($2,500 - $2,000). Therefore, the marginal propensity to save is $50/$500 = 0.1.

(Table) the Table Shows Data on Consumption at Various Levels