If income rises from Rs 40,000 to Rs 50,000 and consumption increases from Rs 22,000 to Rs 30,000, what will be the MPC?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 0.8
Given:
Income rises from Rs 40,000 to Rs 50,000, so ΔY = Rs 10,000
Consumption rises from Rs 22,000 to Rs 30,000, so ΔC = Rs 8,000
The MPC is the change in consumption per unit change in income.
\( \displaystyle MPC = \frac{\Delta C}{\Delta Y} = \frac{8{,}000}{10{,}000} = 0.8 \)
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.” |