Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A): Marginal propensity to consume can never be zero.
Reason (R): Even at zero level of income, a certain amount of consumption takes place.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A) is false but (R) is true.
Assertion (A): Marginal propensity to consume can never be zero. — False. A consumer may not change consumption when income changes; then the MPC is 0.
Reason (R): Even at zero level of income, a certain amount of consumption takes place. — True. Consumption at zero income is autonomous consumption.
NCERT (2026-27): “4.1.1 Consumption … Now, let us look at the value that MPC can take. When income changes, change in consumption ( ΔC ) can never exceed the change in income ( Δ Y) . The maximum value which c can take is 1. On the other hand consumer may choose not to change consumption even when income has changed. In this case MPC = 0. Generally, MPC lies between 0 and 1 (inclusive of both values). This means that as income increases either the consumers does not increase consumption at all (MPC = 0) or use entire change in income on consumption (MPC = 1) or use part of the change in income for changing consumption (0< MPC<1).” “4.1.1 Consumption The most important determinant of consumption demand is household income. A consumption function describes the relation between consumption and income. The simplest consumption function assumes that consumption changes at a constant rate as income changes. Of course, even if income is zero, some consumption still takes place. Since this level of consumption is independent of income, it is called autonomous consumption. …” |