Calculate the Marginal Propensity to Consume for the Economy from the Information

question 94

Multiple Choice

Calculate the marginal propensity to consume for the economy from the information given in Table 10.4.

• A) 0.9
• B) 0.8
• C) 0.5
• D) 0.2
• E) 0.1

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Definitions:

Fixed Cost

Costs that do not change with the level of output or sales, such as rent or salaries.

Variable Cost

Expenses that change in proportion to the amount of goods or services produced, like labor and materials.

Diseconomies of Scale

occur when a company or production process becomes less efficient as it scales up, leading to increased average costs per unit.

Minimum Efficient Scale

The smallest level of production at which a firm can achieve the lowest long-term average cost, allowing it to be competitively viable.