Data on After-Tax Income and Consumption Spending for the Adam

question 29

Multiple Choice

Data on after-tax income and consumption spending for the Adam Smith family are given below: $\begin{array}{|r|r|}\hline {\text { After-Tax Income }} & \text { Consumption Spending } \\\hline \$ 9,000 & \$ 18,100 \\\hline \$ 14,000 & \$ 22,600 \\\hline \$ 19,000 & \$ 27,100 \\\hline \$ 24,000 & \$ 31,600 \\\hline\end{array}$ Based on these data, the Adam Smith family has a marginal propensity to consume equal to: 

• A)0.9.
• B)0.8.
• C)0.75.
• D)0.6.

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Definitions:

Herfindahl Index

The Herfindahl Index is a measure of market concentration used to evaluate the level of competition within an industry, calculated as the sum of the squares of each firm's market share.

Four-Firm Concentration Ratio

An economic measure that assesses the concentration and competitive landscape of an industry by adding the market shares of the four largest firms.

Merged

The combining of two or more entities into one, through acquisitions or consolidations.

Herfindahl Index

An economic indicator used to assess the level of concentration and competition within an industry, calculated by summing the squares of the market shares of all firms in the market.