Consider the following function:C=100+0.7YWhat is the average consumption when income is 200?Namely, the average propensity to consume
Question
Consider the following function:C=100+0.7YWhat is the average consumption when income is 200?Namely, the average propensity to consume
Solution
To calculate the average consumption when income is 200, we need to substitute Y (income) with 200 in the given function C=100+0.7Y.
Step 1: Substitute Y with 200 in the function C = 100 + 0.7 * 200
Step 2: Calculate 0.7 * 200 = 140
Step 3: Add 100 to 140 C = 100 + 140 = 240
So, the total consumption when income is 200 is 240.
The average propensity to consume (APC) is calculated as the total consumption divided by the total income.
APC = C/Y
Substitute C with 240 and Y with 200 in the above formula,
APC = 240/200 = 1.2
So, the average propensity to consume when income is 200 is 1.2.
Similar Questions
Consider the following consumption function:C=100+0.6YWhat is the marginal propensity to consume?
With the Consumption function: C=200+ 0.75(Y-T) and each of G, I and T being 100 what is the value of the Government purchase Multiplier?
Households' consumption function is: C=100+0.7YHouseholds are more pessimistic about the future and they decide to reduce their consumption by 10 units.What is the intercept of the consumption function now?
Let Government purchases and taxes be 500 and 400 respectively ,investment is 200 ,and the spontaneous portion of consumption is 100 , marginal consumption trend is 0.9 ,which is the value of Y?
If average income goes from $30,000 to $33,000 and consumption increases from $29,000 to $31,000, the marginal propensity to consume is ______________.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.a.67b1.5c1.06d0.96
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.