If Your Income Increases from $33,000 to $41,000 and Your

question 135

Multiple Choice

If your income increases from $33,000 to $41,000 and your consumption increases from $8,000 to $12,000, your marginal propensity to consume (MPC) is:

• A) 0.2.
• B) 0.4.
• C) 0.5.
• D) 0.8.
• E) 1.0.

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Definitions:

Consumer Product

A product intended for personal use or consumption by the general public, as opposed to products designed for industrial or commercial use.

Business Product

Goods or services that are sold primarily to other businesses for use in production, resale, or operational purposes, rather than to the ultimate consumer.

Shopping Product

A type of product that consumers spend considerable time and effort in gathering information and comparing alternatives before making a purchase.

Discretionary Product

A product that consumers purchase based on personal preference and available income, as opposed to essential goods.