Question

Given below is the consumption function in an economy.

C=100 +0.5 Y

With the help of a numerical example, explain the behavior of APC (Average Propensity to Consume)

as income increases.​

Answer 1

Answer:

In an economy consumption function is given as C = 100 + 0.5 Y. With the help of a numerical example show that as income increases, APC will decrease. ... Clearly when income increases from र 400 to 600, APC declines from 0.75 to 0.67.