Suppose That When Disposable Income Decreases by $2,000, Consumption Spending

question 299

Multiple Choice

Suppose that when disposable income decreases by $2,000, consumption spending increases by $1500. Given this information, we know that the marginal propensity to consume (MPC) is

• A) )25.
• B) )75.
• C) $1,000/$750 = 1.33.
• D) 1/.25 = 4.

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Definitions:

Demand For Baseballs

The total quantity of baseballs that consumers are willing and able to purchase at various prices during a given time period.

Substitutes

Goods or services that can be used in place of each other, fulfilling the same needs or desires.

Complements

Goods or services that are used together, where the use or consumption of one enhances the use or consumption of the other.

Law Of Supply

The Law of Supply states that, all else being equal, an increase in price results in an increase in the quantity supplied.