On a Graph of a Consumption Function,what Is the Significance

question 132

Multiple Choice

On a graph of a consumption function,what is the significance of the 45-degree line?

• A)It connects all points where desired consumption equals desired expenditure.
• B)It connects all points where desired consumption equals actual disposable income.
• C)It shows the slope of the average consumption function,against which we measure other consumption functions.
• D)It connects all points where desired consumption equals desired saving.
• E)Desired consumption is zero at all points along the 45-degree line.

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Definitions:

Sell Now

A directive or decision to sell an asset or a product immediately, often to capitalize on current market conditions or to avoid future losses.

Incremental Revenues

Additional income generated from a new project or decision, above and beyond existing revenues.

Incremental Variable Costs

Costs that vary with the level of output or activity, changing as the quantity produced changes.

Fully Depreciated

A status of an asset whose entire cost has been expensed with respect to depreciation, leaving its book value at zero except for salvage value, if any.