What Are the Marginal Propensity to Consume and Level of Autonomous

question 33

Multiple Choice

What are the marginal propensity to consume and level of autonomous consumption spending for a consumption function of the following form: C = 1,200 + 0.5DI?

• A) The marginal propensity to consume is 0.5;autonomous consumption spending is $0.50.
• B) The marginal propensity to consume is 0.5;autonomous consumption spending is $1,200.
• C) The marginal propensity to consume is 1,200;autonomous consumption spending is $0.50.
• D) The marginal propensity to consume is 1,200;autonomous consumption spending is $600.
• E) There is insufficient information to answer this.

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Definitions:

Total Product Curve

A graphical representation showing the total quantity of output produced by a firm in relation to varying levels of a single input, holding all other inputs constant.

Total Utility

The total satisfaction or benefit that a person receives from consuming a particular quantity of goods or services.

Marginal Utility

The additional satisfaction or utility obtained by consuming one more unit of a good or service.

Process Innovation

The implementation of a new or significantly improved production or delivery method, enhancing efficiency or reducing costs in the manufacturing or distribution of goods and services.