(Table: Consumption and Savings) Based on the table, the marginal propensity to consume is _____ and the average propensity to consume _____. $$\begin{array} { l c r }
\text { Income } & \text { Consumption Spending } & \text { Saving } \
\$ 30,000 & \$ 30,000 & \$ 0 \
40,000 & 35,000 & 5,000 \
50,000 & 40,000 & 10,000
\end{array}$$
A) 0.5; varies with the level of income
B) $5,000; is $5,000
C) $10,000; is $35,000
D) 2; varies with the level of income

Question

(Table: Consumption and Savings) Based on the table, the marginal propensity to consume is _____ and the average propensity to consume _____. $$\begin{array} { l c r } 
\text { Income } & \text { Consumption Spending } & \text { Saving } \
\$ 30,000 & \$ 30,000 & \$ 0 \
40,000 & 35,000 & 5,000 \
50,000 & 40,000 & 10,000
\end{array}$$
A) 0.5; varies with the level of income
B) $5,000; is $5,000
C) $10,000; is $35,000
D) 2; varies with the level of income

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in income, which is (35,000-30,000)/(40,000-30,000) = 0.5. The average propensity to consume (APC) is consumption divided by income, which varies with the level of income.

(Table: Consumption and Savings) Based on the Table, the Marginal