FIGURE 21-2 Refer to Figure 21-2.The average propensity to consume (APC)will be equal to one (1.0)when disposable income is
A)$0.
B)$1000.
C)$2000.
D)$3000.
E)Not enough information to determine.

Question

FIGURE 21-2 Refer to Figure 21-2.The average propensity to consume (APC)will be equal to one (1.0)when disposable income is
A)$0. 
B)$1000. 
C)$2000. 
D)$3000. 
E)Not enough information to determine.

Quizplus · Accepted Answer

The APC is calculated by dividing consumption by disposable income. In this case, at a disposable income of $1000, the consumption is also $1000 which results in an APC of 1.0. Therefore, the answer is B.