Given a consumption function of C = $25 + 0.75Y_D,the average propensity to consume equals 1 when disposable income equals A)$25. B)$75. C)$100. D)-$300.

Name: Given a consumption function of C = $25 + 0.75Y D ,the average propensity to consume equals 1 when disposable income equals A)$25. B)$75. C)$100. D)-$300.
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Question

Quizplus · Accepted Answer

The average propensity to consume (APC) is calculated as C/YD. Setting APC to 1, we have C = YD. Substituting the consumption function, $25 + 0.75YD = YD, solving gives YD = $100.

Given a Consumption Function of C = $25 + 0