The Average Propensity to Consume

question 38

Multiple Choice

The average propensity to consume

• A)is C divided by disposable income.
• B)is a measure of the additional C generated by additional disposable income.
• C)is negative at very low income levels.
• D)varies directly with disposable income: as disposable income rises,the APC rises.

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Definitions:

Revenue Decrease

A decline in the amount of money received from sales or services over a certain period.

Ethanol Imported

Refers to ethanol (a biofuel) that is bought from foreign producers and brought into a country’s borders, often used as an additive in gasoline.

Consumer Surplus

The contrast between the total expenditure consumers are willing to make on a good or service and the total expenditure they actually make.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, representing profit.