Refer to the information provided in Table 24.5 below to answer the question(s) that follow.
Table 24.5
All Numbers are in $ Million
-Refer to Table 24.5. Assuming constant MPC, at income of $1,000 million, consumption is $________ million, and at income of $1,300 million, consumption is $________ million.

Question

Refer to the information provided in Table 24.5 below to answer the question(s) that follow.
Table 24.5
All Numbers are in $ Million 
-Refer to Table 24.5. Assuming constant MPC, at income of $1,000 million, consumption is $________ million, and at income of $1,300 million, consumption is $________ million.

Quizplus · Accepted Answer

We can calculate the marginal propensity to consume (MPC) by dividing the change in consumption by the change in income between two given levels:

MPC = (ΔC / ΔY)

Using data from the table, we can calculate the MPC between an income of $1,000 million and an income of $1,300 million:

MPC = (920 - 680) / (1,300 - 1,000)
MPC = 240 / 300
MPC = 0.8

Since the question assumes a constant MPC, we can use it to calculate the consumption at the given income levels:

At an income of $1,000 million:
C = 400 + 0.8(1,000)
C = 400 + 800
C = 1,200 million

At an income of $1,300 million:
C = 400 + 0.8(1,300)
C = 400 + 1,040
C = 1,440 million

Therefore, the answer is C) 680; 920.

Refer to the Information Provided in Table 24