Exhibit 10-8

-In Exhibit 10-8, the marginal propensity to consume is
A)0.3
B)0.1
C)0.7
D)0.4
E)0.2

Question

Exhibit 10-8
 
-In Exhibit 10-8, the marginal propensity to consume is
A)0.3 
B)0.1 
C)0.7 
D)0.4 
E)0.2

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption associated with a change in income. In this exhibit, the consumption expenditure (C) changes by $700 when income (Y) increases from $1,000 to $1,500. Therefore, the MPC can be calculated by dividing the change in C by the change in Y: 700/500 = 0.7.

Exhibit 10-8 -In Exhibit 10-8, the Marginal Propensity to Consume Is