Question

Consider the following table for a​ household's consumption expenditures and disposable income.

Compute the average and marginal propensity to consume for each level of income and fill in the table. ​(Enter your responses rounded to two decimal​ places.)

Disposable Income	Consumption	APC	MPC
​$0	​$225	​-----	​-----
​$100	​$300
​$200	​$375
​$300	​$450
​$400	​$525
​$500	​$600

01002003004005006000100200300400500600Income ($)Consumption ($)

Answer 1

Disposable Income ($)	Consumption ($)	APC	MPC
0	225	----	----
100	300	3	0.75
200	375	1.87	0.75
300	450	1.5	0.75
400	525	1.31	0.75
500	600	1.2	0.75

Formula used:

Average propensity to consume

Marginal propensity to consume

Calculation:

APC	MPC
----	----
300/100 = 3	75/100 = 0.75
375/200 = 1.875	75/100=0.75
450/300=1.5	75/100=0.75
525/400=1.3125	75/100=0.75
600/500=1.2	75/100=0.75