If consumption increases by $8 when disposable income increases by $10,the marginal propensity to consume is equal to

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the fraction of a change in disposable income that is spent on consumption. It can be calculated by dividing the change in consumption by the change in disposable income. 
MPC = Change in consumption/Change in disposable income 
In this case, the change in consumption is $8 and the change in disposable income is $10. 
MPC = 8/10 = 0.8 
Therefore, the correct answer is B.

If Consumption Increases by $8 When Disposable Income Increases by $10,the