If Consumption Expenditures for a Household Increase from $1000 to $1800

question 179

Multiple Choice

If consumption expenditures for a household increase from $1000 to $1800 when disposable income rises from $1000 to $2000, the marginal propensity to consume is

• A) 0.18.
• B) 0.3.
• C) 0.2.
• D) 0.8.

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Definitions:

Marginal Costs

The change in total costs that arises when the quantity produced is incremented by one unit; it is the cost of producing one more unit of a good.

Potential Customers

Individuals or businesses that have not yet purchased but have shown interest in a company's products or services.

Expected Profit

The anticipated financial gain from an investment or business activity, considering possible risks and rewards.

Price

The sum of money anticipated, necessary, or provided in exchange for something.