Use the table below to answer the following questions.
Table 27.1.3

-Refer to Table 27.1.3. The marginal propensity to consume is
A)0.35.
B)0.65.
C)1.15.
D)1.65.
E)1.54.

Question

Use the table below to answer the following questions.
Table 27.1.3
 
-Refer to Table 27.1.3. The marginal propensity to consume is
A)0.35. 
B)0.65. 
C)1.15. 
D)1.65. 
E)1.54.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the slope of the consumption line, which is the change in consumption divided by the change in disposable income. From the table, when disposable income increases from $500 to $600, consumption increases from $550 to $615, which is a change of $65. Therefore, the MPC is 65/100, or 0.65.

Use the Table Below to Answer the Following Questions