Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

When consumption function starts from y axis, it indicates that?

Options:

Consumption is zero when income is zero

Consumption is positive when income is zero

Saving is negative when income is positive

Saving is positive when income is zero

Correct Answer:

Consumption is positive when income is zero

Explanation:

When the consumption function starts from the y-axis, it indicates that: Consumption is positive when income is zero

This implies that even when income is zero, there is some level of consumption. In economic terms, it suggests that individuals or households have some baseline consumption (non-zero autonomous consumption) even in the absence of income. This is often represented by the intercept of the consumption function on the y-axis.