If the consumption schedule is a straight line, it can be concluded that the
A) APC is necessarily constant.
B) MPC is zero.
C) MPC is constant at various levels of income.
D) APC is equal to the MPC.

Question

Quizplus · Accepted Answer

If the consumption schedule is a straight line, it indicates that the MPC (Marginal Propensity to Consume) is constant at various levels of income. This is because a straight line implies that for every additional unit of income, households consume a constant proportion of it. However, the APC (Average Propensity to Consume) may not necessarily be constant, as it depends on the level of income. Therefore, neither A, B, nor D is necessarily true.

If the Consumption Schedule Is a Straight Line, It Can