Question

In the country of Marzipana, total consumption in Year 1 was $56,000 million and in Year 2 was $60,000 million. It has been observed that each time disposable income changes in this country by $100, consumption changes by $70. Using this information compute the change in disposable income from Year 1 to Year 2.

Answer 1

Answer:

The change in disposable income from Year 1 to Year 2 is $5,714

Explanation:

We use “Rule of Three” to solve this calculation:

It has been observed that each time consumption changes by $70, disposable income changes in this country by $100.

Now the change in comsumtion in $4,000 (= $60,000 - $56,000), then the change in disposable income =  $4,000 * $100/ $70 = $5,714