Which of the following statements about the average propensity to consume (APC) are true?
(A) APC is zero when consumption is equal to income.
(B) APC is greater than 1 when consumption is more than income.
(C) APC is the change in consumption per unit change in income.
(D) APC is the consumption per unit of income.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (B) and (D) only
The APC is an average: C / Y.
(A) APC is zero when consumption is equal to income. — Incorrect. If C = Y, then C / Y = 1.
(B) APC is greater than 1 when consumption is more than income. — Correct. If C is more than Y, C / Y is above 1.
(C) APC is the change in consumption per unit change in income. — Incorrect. Change in consumption per unit change in income is the MPC.
(D) APC is the consumption per unit of income. — Correct. This is the definition of the APC.
NCERT (2026-27): “Some Definitions Marginal propensity to consume (MPC): it is the change in consumption per unit change in income. It is denoted by c and is equal to ΔC/ΔY. |