The Marginal Propensity to Consume Is

question 13

Multiple Choice

The marginal propensity to consume is:

• A) consumption divided by income.
• B) the change in saving divided by the change in income.
• C) the change in consumption divided by the change in saving.
• D) the change in consumption divided by the change in income.

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Definitions:

Market

An arrangement or venue where parties engage in exchange of goods and services.

Positive Externality

A benefit that is enjoyed by a third-party as a result of an economic transaction or activity in which they did not directly participate.

Marginal Social Benefit

The additional benefit to society from consuming one more unit of a good or service.

Marginal Private Cost

The cost incurred by a firm for producing one additional unit of a good, exclusive of any external costs.