The Change in Disposable Income Is $200 and the Change

question 8

Multiple Choice

The change in disposable income is $200 and the change in saving is $50.What is the marginal propensity to consume (MPC) ?

• A) 0.25
• B) 0.50
• C) 0.66
• D) 0.75
• E) There is not enough information to answer the question.

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Definitions:

Overhead Expenses

Ongoing costs involved in operating a business that are not directly tied to providing goods or services, such as rent, utilities, and administration costs.

Profit

The financial gain obtained when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Selling Price

The selling price is the amount a buyer pays to acquire a product or service from a seller.

Marked Down

A reduction in the price of an item or product to encourage sale.