Let the Consumption Function Be Given by C = 80

question 28

Multiple Choice

Let the consumption function be given by C = 80 + 0.9YDP with permanent disposable income specified according to YDP = 0.5YD + 0.3YD-1) + 0.2YD-2) . Which of the following is true?

• A) The long-run MPC = 0.45 while the short-run MPC = 0.9.
• B) The long-run MPC = 0.9 while the short-run MPC = 0.45.
• C) The long-run MPC = 1.0 while the short-run MPC = 0.9.
• D) The long-run MPC = 0.9 while the sum of the short-run MPCs equals 1.0.
• E) Both the long-run MPC and the short-run MPC equal 0.9.

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Definitions:

Depth of Product Line

The range of different items of the same type that a company sells, offering variety to consumers.

Product Classes

Categories or groups of products that serve similar purposes and are perceived by consumers as related or comparable.

Depth of Product Line

Refers to the variety of product options and choices available within a single product category, offering consumers different features, sizes, or other distinguishing characteristics.