Question

If a $1,000 increase in income leads to an $800 increase in consumption expenditures, then the marginal propensity to consume is?

Answer 1

If a $1,000 increase in income leads to an $800 increase in consumption expenditures, then marginal propensity to consume is 0.8.

Given that a $1,000 increase in income leads to an $800 increase in consumption expenditures.

We are required to find the marginal propensity to consume.

Marginal propensity to consume is the ratio of increase in consumption and the increase in income. It is also known as MPC.

MPC=ΔC/ΔI

ΔC=Change in consumption

ΔI= Change in income.

MPC=800/1000

=0.8

Hence if a $1,000 increase in income leads to an $800 increase in consumption expenditures, then marginal propensity to consume is 0.8.

Learn more about marginal propensity to consume at brainly.com/question/17930875

#SPJ4

Answer 2

The marginal propensity to consume is  0.8.

explanation;

Marginal propensity = change in consumption/ change in income

                                   = 800/1000

                                     = 0.8

In economics, the marginal propensity to eat is defined as the proportion of an aggregate raise in pay that a patron spends at the intake of products and offerings, instead of saving it.

The marginal propensity to shop is the portion of each more greenback of a family's earnings that's saved. MPC is the element of every more dollar of a family's profits that is consumed or spent.

Marginal propensity to eat refers to the proportion of greater income that someone spends in preference to saves. The time period and its formulation are primarily based on observations made by using famed.

Learn more about marginal propensity  here:- brainly.com/question/17930875

#SPJ4