FIGURE 21-2
-Refer to Figure 21-2.What is the marginal propensity to consume associated with this consumption function?
A)0.5
B)0.67
C)1.0
D)-0.5
E)-1.0

Question

FIGURE 21-2
-Refer to Figure 21-2.What is the marginal propensity to consume associated with this consumption function?
A)0.5 
B)0.67 
C)1.0 
D)-0.5 
E)-1.0

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is the change in consumption divided by the change in income. In this context, the MPC is 0.5, indicating that for every additional dollar of income, consumption increases by 50 cents.

FIGURE 21-2 -Refer to Figure 21-2.What Is the Marginal Propensity to Consume