Average propensity to consume
A) is the same as the break-even point.
B) gives the amount a person changes planned consumption for a change in real disposable income.
C) is the amount of consumption that is independent of the level of disposable income.
D) is the proportion of total disposable income that is consumed.

Question

Quizplus · Accepted Answer

The average propensity to consume (APC) is the proportion of total disposable income that is consumed. It is calculated by dividing total consumption by total disposable income. The other options are incorrect. The break-even point is the point at which total revenue equals total costs, and it is not related to the APC. The APC does not give the amount a person changes planned consumption for a change in real disposable income, but rather it indicates the proportion of disposable income that is consumed. Finally, the APC is not the amount of consumption that is independent of the level of disposable income.

Average Propensity to Consume