Question

In: Economics

Fill in the blanks: Income ($) Consumption ($) 0 500 1000 1350 2000 2200 3000 3050...

Fill in the blanks:

Income ($) Consumption ($)
0 500
1000 1350
2000 2200
3000 3050

​

Refer to the data in the above table.

The marginal propensity to consume equals ____. If income increases to $4,000, the level of consumption will be $____.

Solutions

Expert Solution

= 2200 - 1350 / 2000 -1000

= 850 / 1000

= 0.85. The MPC or the marginal propensity to consume is 0.85 and so at the income of 4000 the consumption will be 3400.

Rahul Sunny answered 2 years ago
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