Which of the Following Best Represents the Consumption Function

question 3

Multiple Choice

Which of the following best represents the consumption function?

• A) consumption = autonomous consumption + (the marginal propensity to consume × disposable income)
• B) consumption = disposable income - (autonomous consumption / the marginal propensity to consume)
• C) consumption = disposable income × (1 / 1 - the marginal propensity to consume)
• D) consumption = autonomous consumption + (the marginal propensity to consume × transfer payments) / disposable income

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Definitions:

R&D Expenditure

Funding allocated towards research and development activities to innovate or improve products or services.

Expected Rate of Return

A measure of the anticipated profit or loss on an investment, expressed as a percentage of the investment's initial cost.

Fast-Second Strategies

Business tactics employed by companies to quickly follow innovators, capitalizing on the market research and initial developments made by the first movers without bearing the same risks or costs.

Dominant Firms

Companies that have a major share of the market and can significantly influence the market's dynamics.