Refer to the Information Provided in Figure 8

question 5

Multiple Choice

Refer to the information provided in Figure 8.1 below to answer the questions that follow. Figure 8.1
-Refer to Figure 8.1. The MPS for this household is ________ and the MPC is ________.

• A) 0.4; 0.6
• B) 0.5; 0.5
• C) 0.2; 0.8
• D) 0.3; 0.7

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Definitions:

CVP Analysis

Short for Cost-Volume-Profit Analysis, a tool that helps determine how changes in costs and volume affect a company's operating income and net income.

Disposable Income

The amount of money that households have available for spending and saving after income taxes have been accounted for.

Sensitivity Analysis

A technique used to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

CVP Analyses

Cost-Volume-Profit Analyses, a financial modelling technique that analyzes how changes in costs and volume affect a company's profits.