You Would Be Willing to Pay a Maximum of $1000

question 101

Multiple Choice

You would be willing to pay a maximum of $1000 for an airplane ticket to London,UK during the summer,and you can buy an airplane ticket for $890.Your consumer surplus is:

• A)$90.
• B)$190.
• C)$110.
• D)$100.

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Definitions:

Disposable Income

Disposable income refers to the sum of money that families can use for expenditures and savings once income taxes are deducted.

MPS (Marginal Propensity to Save)

The proportion of an increase in income that an individual or population saves rather than spends on consumption.

APC (Average Propensity to Consume)

The fraction of income that households plan to spend on goods and services; it is the ratio of total consumption to total disposable income.

Disposable Income

Refers to the amount of money that households have available for spending and saving after income taxes have been accounted for.