If the consumption function is C = 90 + 0.75y, then the marginal propensity to consume is
A) 0.2.5.
B) 0.75.
C) 67.5.
D) 90.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption that results from a unit change in income. In this case, the consumption function is C = 90 + 0.75y, which means that for every one unit increase in income, consumption will increase by 0.75 units. Therefore, the MPC is 0.75.

If the Consumption Function Is C = 90 + 0