Refer to the information provided in Table 24.7 below to answer the question(s) that follow.
Table 24.7
All Numbers are in $ Million
-Refer to Table 24.7. Assuming constant MPC, at income of $1,100 million, consumption is $________ million, and at income of $1,400 million, consumption is $________ million.

Question

Refer to the information provided in Table 24.7 below to answer the question(s) that follow.
Table 24.7
All Numbers are in $ Million 
-Refer to Table 24.7. Assuming constant MPC, at income of $1,100 million, consumption is $________ million, and at income of $1,400 million, consumption is $________ million.

Quizplus · Accepted Answer

To determine the consumption at different levels of income, we need to use the MPC (marginal propensity to consume), which is the change in consumption divided by the change in income.

MPC = Change in consumption / Change in income

From the table, we can see that when income increases from $1,000 million to $1,100 million, consumption increases from $700 million to $760 million. Therefore, the change in income is $100 million and the change in consumption is $60 million.

MPC = 60 / 100 = 0.6

Using the MPC, we can calculate the consumption at an income of $1,100 million:

Consumption = 700 + (0.6 x 100)
Consumption = $760 million

Similarly, when income increases from $1,300 million to $1,400 million, consumption increases from $940 million to $1,000 million. Again, the change in income is $100 million and the change in consumption is $60 million.

MPC = 60 / 100 = 0.6

Using the MPC, we can calculate the consumption at an income of $1,400 million:

Consumption = 940 + (0.6 x 100)
Consumption = $1,000 million

Therefore, the answer is C) 760; 1,000.

Refer to the Information Provided in Table 24