Question

Average Propensity to Consume can never be ………………………...
(choose the correct alternative)
a) positive b) zero
c) more than one d) less than one

Answer 1

‘Average Propensity’ to Consume can never be ‘Zero’.

Answer: Option (b)

Explanation:

The ‘average propensity’ to consume is the ratio between the expenditure of total consumption and the income level. It gives the fraction of income which is spent. The ‘average Propensity’ to Consume can be zero only when consumption level comes down to zero.  

The ‘average propensity’ to consume would be zero because at this level of national income there will be freedom of consumption at the autonomous level.