Suppose When John's Income Increases from $10,000 to $15,000, His

question 272

Multiple Choice

Suppose when John's income increases from $10,000 to $15,000, his consumption increases from $3,000 to $4,500. What is the value of his marginal propensity to save?

• A) 0.2
• B) 0.3
• C) 0.7
• D) 0.8

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Definitions:

Estimated Overhead Cost

This refers to the projection or forecast of indirect costs associated with manufacturing processes, not directly tied to specific units of production.

Expected Activity

The projected level of activity or volume of work anticipated for a certain period, often used for planning and budgeting purposes.

Activity Rate

A measure used in activity-based costing to assign costs to activities based on their use of resources.