If consumption expenditures for a household increase from $1000 to $1800 when disposable income rises from $1000 to $2000, the marginal propensity to consume is
A)0.8.
B)0.3.
C)0.2.
D)0.18.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption expenditures divided by the change in disposable income. In this case, the MPC is (1800 - 1000) / (2000 - 1000) = 0.8.

If Consumption Expenditures for a Household Increase from $1000 to $1800