If consumption is $1,230 when disposable income is $1,420,and consumption is $1,400 when disposable income is $1,620,then the marginal propensity to consume (MPC)is
A) 1.15.
B) 0.15.
C) 6.67.
D) 0.85.

Question

Quizplus · Accepted Answer

MPC = (change in consumption) / (change in disposable income)

MPC = ($1,400 - $1,230) / ($1,620 - $1,420)

MPC = $170 / $200

MPC = 0.85

Therefore, the MPC is 0.85. The correct answer is D.

If Consumption Is $1,230 When Disposable Income Is $1,420,and Consumption