The figure given below shows the consumption function of a household. Figure 9.2 In Figure 9.2, the line segment AD represents:
A)autonomous consumption.
B)the maximum amount of saving.
C)negative consumption.
D)zero consumption.
E)autonomous income.

Question

The figure given below shows the consumption function of a household. Figure 9.2  In Figure 9.2, the line segment AD represents:
A)autonomous consumption. 
B)the maximum amount of saving. 
C)negative consumption. 
D)zero consumption. 
E)autonomous income.

Quizplus · Accepted Answer

The line segment AD represents autonomous consumption, which is the amount of consumption spending that the household would still undertake even if their income falls to zero. This is because it represents the intercept of the consumption function on the vertical axis, which is the level of consumption when income is zero.

The Figure Given Below Shows the Consumption Function of a Household