The figure given below shows the consumption function of a household.
Figure 9.2

-In Figure 9.2, the line segment AD represents:
A) autonomous consumption.
B) the maximum amount of saving.
C) negative consumption.
D) zero consumption.
E) autonomous income.

Question

The figure given below shows the consumption function of a household.
Figure 9.2
 
-In Figure 9.2, the line segment AD represents:
A) autonomous consumption. 
B) the maximum amount of saving. 
C) negative consumption. 
D) zero consumption. 
E) autonomous income.

Quizplus · Accepted Answer

The line segment AD represents autonomous consumption, which is the minimum level of consumption that a household will have regardless of their current level of income. This is because even if a household has no income, they may still need to spend money on necessities such as housing, utilities, and food. Therefore, autonomous consumption is not influenced by changes in income and is represented by the vertical intercept of the consumption function.

The Figure Given Below Shows the Consumption Function of a Household