Consider a Consumption Function of the Following Form: C =

question 73

Multiple Choice

Consider a consumption function of the following form: C = 50 + (0.6) Y_D.At what level of disposable income will desired savings be equal to zero?

• A)31.25
• B)50
• C)83.33
• D)125
• E)208.33

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Definitions:

Soda

A carbonated soft drink that is flavored and sweetened, often consumed as a beverage.

Levy

Imposition of a tax, fee, or fine by a government or regulatory authority.

Consumption

The act of using goods and services to satisfy needs or wants.

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in the price of that good.