Chapter 24: Consumption

  • Created by: Sin Heng
  • Created on: 17-01-20 10:54
  1. What is the difference between 'durable good' and 'non-durable good'? 

These are goods that are bought at a point in time and are able to be used over a long period of time, unlike non-durable goods which are used up in a short period of time 


  1. If income rose by £150 in a month and consumption rose from £150 to £250, what is the MPC (marginal propensity to consume)? 

MPC = ΔC / ΔY              (250-150) / 150 = 0.6 


  1. If total disposable income in an economy was £10,800,000,000 and consumption was 8,500,000,000. What would be the APC (average propensity to consume)? 

APC = C / Y          8,500,000,000 / 10,800,000,000 = 0.79 


  1. What is the reason to why MPC may be higher


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