The table shows the salary of a construction worker in Japan. The marginal propensity to consume (MPC) is:
$$\begin{array} { | c | c | c | }
\hline \text { YEAR } & \begin{array} { c }
\text { REAL } \
\text { INCOME } \
\text { (in yen) }
\end{array} & \begin{array} { c }
\text { REAL } \
\text { CONSUMPTION } \
\text { (in yen) }
\end{array} \
\hline 2015 & 5.5 \text { million } & 3.3 \text { million } \
\hline 2016 & 6 \text { million } & 3.6 \text { million } \
\hline 2017 & 6.2 \text { million } & 3.72 \text { million } \
\hline
\end{array}$$
A)1.5.
B)0.8.
C)0.4.
D)0.6.

Question

The table shows the salary of a construction worker in Japan. The marginal propensity to consume (MPC) is:
$$\begin{array} { | c | c | c | } 
\hline \text { YEAR } & \begin{array} { c } 
\text { REAL } \
\text { INCOME } \
\text { (in yen) }
\end{array} & \begin{array} { c } 
\text { REAL } \
\text { CONSUMPTION } \
\text { (in yen) }
\end{array} \
\hline 2015 & 5.5 \text { million } & 3.3 \text { million } \
\hline 2016 & 6 \text { million } & 3.6 \text { million } \
\hline 2017 & 6.2 \text { million } & 3.72 \text { million } \
\hline
\end{array}$$
A)1.5.
B)0.8.
C)0.4.
D)0.6.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated as the change in consumption divided by the change in income. From 2016 to 2017, the income increased by 0.2 million yen (from 6 to 6.2 million yen), and the consumption increased by 0.12 million yen (from 3.6 to 3.72 million yen). Therefore, MPC = 0.12 / 0.2 = 0.6.

The Table Shows the Salary of a Construction Worker in Japan