Table 12-4

-Refer to Table 12-4.Given the consumption schedule in the table above,the marginal propensity to consume is
A)0.5.
B)0.6.
C)0.75.
D)0.8.

Question

Table 12-4
 
-Refer to Table 12-4.Given the consumption schedule in the table above,the marginal propensity to consume is
A)0.5. 
B)0.6. 
C)0.75. 
D)0.8.

Quizplus · Accepted Answer

Marginal propensity to consume (MPC) is the change in consumer spending that occurs when disposable income changes. In this case, the MPC can be calculated as the change in consumption divided by the change in disposable income. Looking at the table, a $100 increase in disposable income leads to a $60 increase in consumption. Therefore, MPC = 60/100 = 0.6.

Table 12-4 -Refer to Table 12-4.Given the Consumption Schedule in the Table