How Do Economists Define the Marginal Propensity to Consume (MPC)

question 121

Multiple Choice

How do economists define the marginal propensity to consume (MPC) ?

• A)as the fraction of total disposable income that households save
• B)as the fraction of total disposable income that households spend on consumption
• C)as the additional disposable income households earn in a given period
• D)as the additional consumption that results from one dollar increase in disposable income

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Definitions:

Variable Overhead

Indirect production costs that vary with the level of output, such as utilities or indirect materials used in the production process.

Direct Materials

The raw materials that are directly used in the manufacturing process of a product and are easily traceable to that product.

Direct Labor-Hours

A measure of the work done by manufacturing employees directly involved in the production process, typically quantified in hours.

Variable Overhead

Costs that vary with the level of production output, such as supplies and utility expenses associated with manufacturing operations.