If income rises from $1,000 to $1,400 and consumption rises from $800 to $1,168,the marginal propensity to consume is __________ percent.

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated as the change in consumption divided by the change in income. Here, the change in consumption is $368 ($1,168 - $800) and the change in income is $400 ($1,400 - $1,000). MPC = $368 / $400 = 0.92, which is 92%.

If Income Rises from $1,000 to $1,400 and Consumption Rises