The table given below shows the disposable income and consumption of a household.In the table below,the level of saving at a disposable income of $1,200 is:
Table 9.1

A)$80
B)$240
C)$950
D)$1,200
E)$1,300

Question

The table given below shows the disposable income and consumption of a household.In the table below,the level of saving at a disposable income of $1,200 is: ​
Table 9.1
​

A)$80​ 
B)$240​ 
C)$950​ 
D)$1,200​ 
E)$1,300​

Quizplus · Accepted Answer

Disposable income is the income that is available to a household for spending or saving after income taxes have been paid. Consumption is the total expenditure made by the household on goods and services. Saving is the difference between disposable income and consumption.

In the given table, the consumption of the household increases as the disposable income increases. However, the rate of increase in consumption is lower than the rate of increase in disposable income. Therefore, as the disposable income increases, the level of saving also increases.

At a disposable income of $1,200, the consumption is $960. Therefore, the saving is:

Saving = Disposable income - Consumption
Saving = $1,200 - $960
Saving = $240

Hence, the level of saving at a disposable income of $1,200 is $240. Therefore, the correct choice is B.

The Table Given Below Shows the Disposable Income and Consumption