The Benefit of an Activity Is

question 103

Multiple Choice

The benefit of an activity is

• A)measured by what must be given up to get one more unit of the activity.
• B)purely objective and measured in dollars.
• C)the value of its opportunity cost.
• D)the gain or pleasure that it brings.
• E)not measurable on the margin.

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Definitions:

Saving

The portion of income that is not spent on consumption but instead is set aside for future use or investment.

Disposable Income

Income left for households to direct into savings and spending after deductions of income taxes.

APC

APC, or Average Propensity to Consume, is the ratio of total consumption to total disposable income, indicating how much income is spent.

Induced Consumption

The portion of consumer spending that changes in response to changes in disposable income.