If Consumption Increases by $9 When Disposable Income Increases by $10

question 145

Multiple Choice

If consumption increases by $9 when disposable income increases by $10, the marginal propensity to consume (mpc) equals:

• A)0.1.
• B)0.9.
• C)1.0.
• D)9.0.

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Definitions:

Purchases Account

An account used in accounting to track all purchases of goods and materials that a business intends to resell.

Cost Of Goods Purchased

The total expense incurred by a company to buy the goods it has purchased for resale, including shipping and handling fees.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, highlighting the efficiency of a company in managing its operations and costs.

Operating Expenses

Costs incurred during the normal operations of a business, excluding the cost of goods sold.