Refer to the information provided in Table 8.10 below to answer the questions that follow.
Table 8.10
-Refer to Table 8.10. The MPC in this economy is
A) 0.5.
B) 0.6.
C) 0.75.
D) 0.8.

Question

Refer to the information provided in Table 8.10 below to answer the questions that follow.
Table 8.10 
-Refer to Table 8.10. The MPC in this economy is
A) 0.5. 
B) 0.6. 
C) 0.75. 
D) 0.8.

Quizplus · Accepted Answer

The MPC is derived from the formula ΔConsumption/ΔIncome. Looking at Table 8.10, we see that when disposable income increases from $10,000 to $11,000, consumption increases from $14,000 to $15,500. Therefore, the MPC = (ΔConsumption/ΔIncome) = ($1,500/$1,000) = 0.75.

Refer to the Information Provided in Table 8