(Advanced Analysis)If the Equation for the Consumption Schedule Is C

question 92

Multiple Choice

(Advanced analysis) If the equation for the consumption schedule is C = 20 + .8Y,where C is consumption and Y is disposable income,then the average propensity to consume is 1 when disposable income is:

• A) $80.
• B) $100.
• C) $120.
• D) $160.

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Definitions:

Engineered

The process of designing, constructing, and testing structures, materials, and systems based on scientific principles.

Operating Leverage

An indicator of the extent to which increases in revenue lead to increases in operating profit, showing the level of fixed expenses within the financial framework of a business.

Fixed Costs

Expenses that do not change with the level of production or sales over a short period, such as rent, salaries, and insurance.

Forecasting Risk

The potential for future revenues or earnings to deviate from projected amounts due to variables that affect demand, supply, and pricing.