$$\begin{array} { | l | l | }
\hline \begin{array} { l }
\text { Disposable income } \
\text { (dollars) }
\end{array} & \begin{array} { l }
\text { Consumption } \
\text { expenditure (dollars) }
\end{array} \
\hline 0 & 100 \
\hline 100 & 180 \
\hline 300 & 340 \
\hline 500 & 500 \
\hline 700 & 660 \
\hline 900 & 820 \
\hline
\end{array}$$
-In the above table, the marginal propensity to consume equals
A) 0.80.
B) 0.85.
C) 0.75.
D) 0.90.

Question

$$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Disposable income } \
\text { (dollars) }
\end{array} & \begin{array} { l } 
\text { Consumption } \
\text { expenditure (dollars) }
\end{array} \
\hline 0 & 100 \
\hline 100 & 180 \
\hline 300 & 340 \
\hline 500 & 500 \
\hline 700 & 660 \
\hline 900 & 820 \
\hline
\end{array}$$
-In the above table, the marginal propensity to consume equals
A) 0.80.
B) 0.85.
C) 0.75.
D) 0.90.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated as the change in consumption divided by the change in disposable income. Between $100 and $300, consumption increases by $160 ($340 - $180) while income increases by $200 ($300 - $100), giving an MPC of $160/$200 = 0.80.

-In the Above Table, the Marginal Propensity to Consume Equals