Following Is Consumption Schedules for Three Private Closed Economies

question 135

Multiple Choice

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. Refer to the above data.The marginal propensity to consume:

• A)is highest in economy (1).
• B)is highest in economy (3).
• C)is highest in economy (2).
• D)cannot be calculated from the data given.

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Definitions:

Demand Equals

A state in a market where the quantity of a good or service desired by buyers is equal to the quantity supplied by sellers, resulting in market equilibrium.

Marginal Cost

The added expenditure resulting from creating an additional product or service unit.

Long Run

A period of time in which all factors of production and costs are variable, allowing all inputs to be adjusted.

Zero Economic Profit

A situation where total revenues are exactly equal to total costs, indicating no supernormal profit beyond the normal rate of return.