Marginal 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

Marginal propensity to consume (MPC) is the increase in consumer spending due to a unit increase in income. In other words, it is the percentage of additional income that a person or household would spend instead of saving. Therefore, option B is the correct choice as it accurately defines MPC. Option A is incorrect as it refers to the break-even point, which is the level of output or sales at which total costs equal total revenue. Option C is incorrect as there is no consumption that is independent of disposable income. Option D is partially correct but does not provide a complete definition of MPC.

Marginal Propensity to Consume