If a household’s income falls from R20 000 to R17 000 and its consumption falls from R18 000 to R15 000, then its… a. marginal propensity to consume is -0,67. b. marginal propensity to consume is 0,88. c. marginal propensity to consume is 0,20. d. marginal propensity to save is zero. e. marginal propensity to save is 0,12.
Answer: Marginal Propensity to Consume (MPC) The marginal propensity to consume (MPC) is a measure of the proportion of an increase in income that is spent on consumption. It is calculated by dividing the change in consumption (ΔC) by the