The consumption schedule in the diagram below indicates that:
A)consumers will maximize their satisfaction where the consumption schedule and 45$\degree$ line intersect.
B)up to a point consumption exceeds income, but then falls below income.
C)the MPC falls as income increases.
D)households consume as much as they earn.

Question

The consumption schedule in the diagram below indicates that: 
A)consumers will maximize their satisfaction where the consumption schedule and 45$\degree$ line intersect. 
B)up to a point consumption exceeds income, but then falls below income. 
C)the MPC falls as income increases. 
D)households consume as much as they earn.

Quizplus · Accepted Answer

The consumption schedule initially shows that as income increases, consumption also increases but at a decreasing rate. However, at a certain point, consumption stops increasing and starts decreasing even when income continues to increase. This indicates that up to a certain income level, consumption exceeds income but beyond that income level, consumption falls below income.

The Consumption Schedule in the Diagram Below Indicates That °\degree° Line Intersect

The Consumption Schedule in the Diagram Below Indicates That $\degree$ Line Intersect