Here Is a Consumption Function: C = C₀ + MPC(Y_d)

question 110

Multiple Choice

Here is a consumption function: C = C₀ + MPC(Y_d) .If consumption is $3,300,MPC =0.85,and disposable income is $2,100,what does autonomous consumption equal?

• A) $899.15
• B) $450
• C) $1,515
• D) $4,785
• E) none of the above

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Definitions:

Periodic LIFO

Periodic LIFO (Last-In, First-Out) is an inventory valuation method used in accounting that assumes the most recently purchased items are sold first, and ending inventory costs are determined at the end of the accounting period.

Ending Inventory

The total value of all inventory a company has in its possession at the end of a reporting period, vital for calculating cost of goods sold.

Cost Flow Assumption

An accounting method used to value inventory and determine the cost of goods sold, based on the assumed flow of goods.

Moving Average Method

The Moving Average Method is an inventory costing method that calculates the average cost of inventory by taking the average of the costs of goods available for sale.