Question

If income rises from Rs. 50,000 to Rs.60,000,consumption increases from Rs.40,000 to Rs.48,000.In this situation,what will be the value of MPC​

Answer 1

Answer:

Marginal Propensity to consume refers to the percentage change in consumption for every one rupee of change in the income.

Change in income= Rs. 1,000 crores and change in savings= Rs. 500 crores.

change in consumption= 1000-500 = Rs. 500 crores.

MPC= change in consumption/ change in income

= 500/1000= 0.5