Attempts: Average: /5 2. The consumption function and its components ct to earn
ID: 1115495 • Letter: A
Question
Attempts: Average: /5 2. The consumption function and its components ct to earn an annual income of $8,000 under normal circumstances and $10,000 in the event that Caroline can expe she gets a sales bonu are the same. s. You can assume that Caroline does not pay taxes, so her total income and disposable income The following table shows Caroline's consumption at the two different income levels. Find the marginal propensity to consume (MPC) when Caroline's income rises from $8,000 to $10,000: Income Consumption $8,000 $10,000 MPC $7,600 $9,200 Caroline's consumption function can be represented with the following equation: C a + b(Disposable Income) Which of the following statements are true of the variable a in Caroline's consumption function? Check all that apply. It represents the Y-intercept of Caroline's consumption function on a graph. It represents Caroline's autonomous consumption spending It represents marginal propensity to consume. It is equal to $1,050.Explanation / Answer
MPC= change in C/change in Y= 1600/2000= 0.8
a is the intercept term and it represents autonomous consumption. Options 1 and 2.
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