Refer to the Given Data for a Hypothetical Economy

question 76

Multiple Choice

$$\begin{array} { | c | r | } \hline \text { Disposable Income } & \text { Saving } \\\hline \$ 0 & - \$ 10 \\\hline 50 & 0 \\\hline 100 & 10 \\\hline 150 & 20 \\\hline 200 & 30 \\\hline\end{array}$$ Refer to the given data for a hypothetical economy. The marginal propensity to consume is

• A) 0.80.
• B) 0.75.
• C) 0.20.
• D) 0.25.

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Definitions:

Affordable Consumption Options

Economically accessible choices available to consumers for goods and services within their budget constraints.

Indifference Curves

A graph representing different bundles of goods between which a consumer is indifferent, showing preferences and trade-offs.

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute a product with a cheaper alternative.

Income Effect

The change in consumption resulting from a change in real income, typically due to a change in prices, that can increase or decrease purchasing power.