(Table)In the table,the marginal propensity to consume is ________ and the average propensity to consume ________. Income
Consumption Spending
Saving
$30,000
$30,000
$0
40,000
35,000
5,000
50,000
40,000
10,000
A) 0.5;varies with the level of income
B) $5,000;is $5,000
C) $10,000;is $35,000
D) 2;varies with the level of income

Question

Quizplus · Accepted Answer

The marginal propensity to consume (MPC) is calculated as the change in consumption spending divided by the change in income. Therefore, for the first two points, the MPC is 0.5 (5000/10000 and 5000/10000). However, as income increases, the MPC may change, so it varies with the level of income. The average propensity to consume (APC) is calculated as consumption spending divided by income. Therefore, the APC is $1 for the first point, $0.875 for the second point, and $0.8 for the third point. Thus, the average propensity to consume varies with the level of income as well.

(Table)In the Table,the Marginal Propensity to Consume Is ________ and the Average