Use the table below to answer the following questions.
Table 27.1.2

-Refer to Table 27.1.2. What is the value of the marginal propensity to consume?
A)0.75
B)0.25
C)1.33
D)0.34
E)0.67

Question

Use the table below to answer the following questions.
Table 27.1.2
 
-Refer to Table 27.1.2. What is the value of the marginal propensity to consume?
A)0.75 
B)0.25 
C)1.33 
D)0.34 
E)0.67

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in income. From the table, we can see that when income increases from $100 to $200, consumption increases from $150 to $250, which is a change of $100 for both. Therefore, the MPC is 100/100 = 1.0. The best choice(s) is/are E because 0.67 is not the correct value for the MPC.

Use the Table Below to Answer the Following Questions