If Ben's MPC Is

question 102

Multiple Choice

If Ben's MPC is .80, this means that he will:

• A)spend eight-tenths of any increase in his disposable income.
• B)spend eight-tenths of any level of disposable income.
• C)break even when his disposable income is $8,000.
• D)save eight-tenths of any level of disposable income.

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Definitions:

Actual Price

The price at which a good or service is sold in the market, as opposed to its listed or theoretical price.

Producer Surplus

The difference in the expected remuneration by producers for offering a good or service and the actual revenue they secure.

Purely Competitive

A market structure characterized by many buyers and sellers, where each seller is a price taker and homogeneous products are offered.

Market

An economic system that allows buyers and sellers to exchange goods and services, determining prices through the laws of supply and demand.