William owns a large amount stock in Claire's Home brew a regional brewing company that is considered a likely takeover target b
1 answer:
You might be interested in
Answer:
i) the intercept is - 124.84 and it is negative because when the income of individuals is zero their consumption = - 124.84 (i.e. consumer borrows 124.84 ).
ii) $25465.16
iii) attached below
Explanation:
Given that the equation is
^cons = -124.84 + .853 * inc
<u>i) Interpret the intercept in this equation and comment on its sign and magnitude</u>
intercept : the intercept is - 124.84 and it is negative because when the income of individuals is zero their consumption = - 124.84 (i.e. consumer borrows 124.84 ).
The slope = .853 is positive because consumption is will increase by 0.853 whether the income rises or decreases by the value of 1
<u>ii) Determine the predicted consumption when family income = $30000</u>
^cons = -124.84 + 0.853 * ( 30000 )
= 25465.16
hence when family income = $30000 the predicted consumption = 25465.16
<u>iii) Draw a graph of the estimated MPC and APC ( inc on the x-axis )</u>
MPC = 0.853 ( constant )
APC = Cons / inc
attached below is the required graph
