If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the marginal propensity to consume?
A)0.1
B)0.9
C)5.5
D)6.1

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption due to a change in income. In this case, the consumption function is C = 5,500 + 0.9Y, which means that for every additional $1 of income, consumption increases by $0.9. Therefore, the MPC is 0.9.

If the Consumption Function Is Defined as C = 5,500