How Large Will the Total Change in Income Be from a Change

question 114

Multiple Choice

How large will the total change in income be from a change in investment of $15 if the marginal propensity to consume is .8?

• A)$12
• B)$20
• C)$25
• D)$75
• E)$200

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Definitions:

Lowest Price

The minimum cost at which a product or service can be purchased, often emphasized in marketing to attract consumers.

Short Run

A period during which at least one input, such as plant size or capital, is fixed and cannot be changed.

Maximum Profit

The highest possible financial gain achievable by a firm from its operations, after all costs have been subtracted from total revenue.

Output

The quantity of goods or services produced within a given time frame by a firm, industry, or country.