Use the figure below to answer the following questions.

Figure 27.1.1
This figure describes the relationship between consumption expenditure and disposable income for an economy.
-Refer to Figure 27.1.1. The marginal propensity to consume for this economy is
A)0.5.
B)1.
C)0.2.
D)0.8.
E)0.6.

Question

Use the figure below to answer the following questions.
  
Figure 27.1.1
This figure describes the relationship between consumption expenditure and disposable income for an economy.
-Refer to Figure 27.1.1. The marginal propensity to consume for this economy is
A)0.5. 
B)1. 
C)0.2. 
D)0.8. 
E)0.6.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in income. Without the figure, we assume the correct answer is D) 0.8, which is a common MPC value in economic models.

Use the Figure Below to Answer the Following Questions