-In the above table, the marginal propensity to consume when disposable income changes from $5,000 to $6,000 is
A)0.8.
B)0.75.
C)0.6.
D)0.5.

Question

-In the above table, the marginal propensity to consume when disposable income changes from $5,000 to $6,000 is
A)0.8. 
B)0.75. 
C)0.6. 
D)0.5.

Quizplus · Accepted Answer

The marginal propensity to consume is the change in consumption divided by the change in disposable income. In this case, the change in consumption is $400 (from $4,000 to $4,400) and the change in disposable income is $1,000 (from $5,000 to $6,000). Therefore, the marginal propensity to consume is 400/1000 = 0.4.

-In the Above Table, the Marginal Propensity to Consume When