If Income Rises from $10,000 to $20,000 and Savings Increases

question 60

Multiple Choice

If income rises from $10,000 to $20,000 and savings increases from $9,000 to $16,000, then the marginal propensity to save is

• A) 0.10.
• B) 0.30.
• C) 0.70.
• D) 0.80.

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Definitions:

Imperfect Competition

Imperfect competition is a market structure where the conditions necessary for perfect competition are not met, leading to price and output decisions that are influenced by individual firms.

Efficient Market Outcomes

Refers to a scenario where market prices fully reflect all available information, leading to an optimal allocation of resources.

Monopolistic Competitive Industries

Industries characterized by many firms offering slightly differentiated products, where each has some degree of market power.

Market Power

The ability of a firm or group of firms to raise and maintain prices above the level that would prevail under competition.