If the Consumption Function Is Expressed as C = a

question 80

Multiple Choice

If the consumption function is expressed as C = a + mpc × Y_D,then "a" represents

• A)autonomous consumer expenditure.
• B)the marginal propensity to consume.
• C)the expenditure multiplier.
• D)disposable income.

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Definitions:

Price Elasticity

A measure of the responsiveness of the quantity demanded of a good to a change in its price.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price point.

Equilibrium Price

The cost level where the amount of a product or service that consumers want to buy equals what is available, resulting in a balanced market situation.

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity supplied.