If your income increased from $30 000 to $40 000 per year, and your consumption increased from $28 000 to $34 000 per year, your MPC is:

Question

Quizplus · Accepted Answer

The Marginal Propensity to Consume (MPC) is calculated as the change in consumption divided by the change in income. Here, the change in consumption is $34,000 - $28,000 = $6,000, and the change in income is $40,000 - $30,000 = $10,000. Therefore, MPC = $6,000 / $10,000 = 0.6.

If Your Income Increased from $30 000 to $40 000