$$\begin{array} { | c | c | }
\hline \text { Disposable Income } & \text { Consumption } \
\hline \$ 300 & \$ 310 \
\hline 350 & 340 \
\hline 400 & 370 \
\hline 450 & 400 \
\hline 500 & 430 \
\hline
\end{array}$$ The table shows a consumption schedule. The marginal propensity to consume is
A) 0.80.
B) 0.75.
C) 0.60.
D) 0.40.

Question

$$\begin{array} { | c | c | } 
\hline \text { Disposable Income } & \text { Consumption } \
\hline \$ 300 & \$ 310 \
\hline 350 & 340 \
\hline 400 & 370 \
\hline 450 & 400 \
\hline 500 & 430 \
\hline
\end{array}$$ The table shows a consumption schedule. The marginal propensity to consume is
A) 0.80.
B) 0.75.
C) 0.60.
D) 0.40.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated as the change in consumption divided by the change in disposable income. Between each interval, consumption increases by $30, while disposable income increases by $50, so MPC = 30/50 = 0.60.

The Table Shows a Consumption Schedule