FIGURE 21-1 Refer to Figure 21-1.The average propensity to consume (APC)will be equal to one (1.0)when disposable income is equal to A)0. B)Y₁. C)Y₂. D)Y₃. E)desired saving.

Question

Quizplus · Accepted Answer

The average propensity to consume (APC) is defined as the ratio of consumption expenditure to disposable income. When disposable income is equal to Y₂, the graph shows that consumption expenditure is equal to disposable income, which means APC is equal to 1 (or 100%). Therefore, the correct answer is option C.