Chapter 24: Consumption
- Created by: Sin Heng
- Created on: 17-01-20 10:54
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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
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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
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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
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What is the reason to why MPC may be higher…
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