The value of MPC lies between:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 0 and 1
When income rises, consumption changes by some part of the rise. That part, the change in consumption per unit change in income, is the marginal propensity to consume (MPC = ΔC ÷ ΔY). It cannot be more than the whole rise, nor less than nothing, so MPC lies between 0 and 1, both values included:
MPC is 1 when the whole of the extra income is consumed;
MPC is 0 when consumption does not change at all as income changes.
Usually a part of the extra income is consumed and the rest saved, so MPC is a fraction.
Note: A same/similar question was asked in CUET (UG) in the papers below.
| 2026 | 2025 | 2024 | 2023 | 2022 |
| 13-05 S1 31-05 S1* | – | – | – | – |
* A similar question.
NCERT (2025-26): “4.1.1. Consumption … The induced component of consumption, cY shows the dependence of consumption on income. When income rises by Re 1. induced consumption rises by MPC i.e. c or the marginal propensity to consume. It may be explained as a rate of change of consumption as income changes.… …Now, let us look at the value that MPC can take. When income changes, change in consumption (∆C) can never exceed the change in income (∆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).…” |