The Consumption Schedule in the Diagram Below Indicates That

question 94

Multiple Choice

The consumption schedule in the diagram below indicates that:

• A) consumers will maximize their satisfaction where the consumption schedule and 45° line intersect.
• B) up to a point consumption exceeds income, but then falls below income.
• C) the MPC falls as income increases.
• D) households consume as much as they earn.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good consumers are willing to buy.

Substitute

a product or service that can be used in place of another to satisfy similar needs or desires.

Complement

Goods or services that, when used together, enhance each other's value to the consumer.

Income Increase

A rise in the amount of money received, especially on a regular basis, through work, investments, or business.