Figure 3-4

-In Figure 3-4 above,the marginal propensity to consume is
A)500.
B)2.5.
C)0.6.
D)0.4.
E)1.5.

Question

Figure 3-4
 
-In Figure 3-4 above,the marginal propensity to consume is
A)500. 
B)2.5. 
C)0.6. 
D)0.4. 
E)1.5.

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the slope of the consumption function, which is the change in consumption divided by the change in disposable income. In the given figure, the change in consumption from 2000 to 3000 is 800, and the change in disposable income is 1000. So, MPC = 800/1000 = 0.8.

Figure 3-4 -In Figure 3-4 Above,the Marginal Propensity to Consume Is