Practicing Success
A consumer chooses no to change the consumption when his income has changed. In that case MPC is : |
Equal to 0.5 Equal to 0.1 Equal to 1 Zero |
Zero |
The correct answer is option (4) : Zero 1. The slope equals the change in consumption divided by the change in disposable personal income. The ratio of the change in consumption (ΔC) to the change in disposable personal income (ΔY d) is the marginal propensity to consume (MPC) 2. The Marginal Propensity to Consume (MPC), which is the proportion of additional income that a consumer chooses to spend on consumption. In this case, if a consumer chooses not to change consumption despite a change in income, it implies that the MPC is zero. So, the correct answer is (4) Zero. |