Based on the information in the following table:
Income Consumption Saving
$30,000 $30,000 0
40,000 35,000 5,000
50,000 40,000 10,000
1. What is the Marginal Propensity to Consume?
2. Since the APC varies with income level, what is the Average Propensity to Consume at income level I=$40,000?
3.What is the Marginal Propensity to Save?
4.Since the APS varies with income level, what is the Average Propensity to Save at income level I=$40,000?
Remember: Marginal Propensity to Consume (MPC) = Change in Consumption/Change in Income (or ∆C/∆I); Marginal Propensity to Save (MPS) = Change in Savings/Change in Income (or ∆S/∆I); MPC + MPS ; see Question 1 for reminder of definitions for APC and APS.
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Based on the information in the following table:
Income Consumption Saving
$30,000 $30,000 0
40,000 35,000 5,000
50,000 40,000 10,000
1. What is the Marginal Propensity to Consume?
2. Since the APC varies with income level, what is the Average Propensity to Consume at income level I=$40,000?
3.What is the Marginal Propensity to Save?
4.Since the APS varies with income level, what is the Average Propensity to Save at income level I=$40,000?
Remember: Marginal Propensity to Consume (MPC) = Change in Consumption/Change in Income (or ∆C/∆I); Marginal Propensity to Save (MPS) = Change in Savings/Change in Income (or ∆S/∆I); MPC + MPS ; see Question 1 for reminder of definitions for APC and APS.