Question

Write short note on Marginal Propensity to Consume.

Answer 1

The marginal propensity to consume (MPC) is equal to ΔC / ΔY, where ΔC is change in consumption, and ΔY is change in income. If consumption increases by 80 cents for each additional dollar of income, then MPC is equal to 0.8 / 1 = 0.8.

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Answer 2

Answer:

The marginal consumption propensity is a metric quantifying the consumption caused.

• The marginal consumer propensity (MPC) is a statistic quantifying induced consumption. It is the idea that a rise in personal product expenditure which is the consumption correlates with an increase in disposable income the income after taxes and transfers.
• The average consumption preference is equivalent to  ΔC / ΔY, where ΔC is is the change in the consumption and  ΔY is the change in the total income.