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Q: What will be the value of MPC (Marginal Propensity to Consume) if the consumer's consumption patterns change due to a change in income ?
  • A. MPC = More than 1
  • B. MPC = 0
  • C. MPC = 1
  • D. MPC = (Ranging between 0 and 1)
Correct Answer: Option D - Marginal Propensity to Consume or MPC is dependent on the income level. It may vary with the income levels and it can be seen that MPC is lower at highs income levels. MPC can be calculated by determining the change of consumption divided by the change in income. The value of MPC will range between 0 and 1.
D. Marginal Propensity to Consume or MPC is dependent on the income level. It may vary with the income levels and it can be seen that MPC is lower at highs income levels. MPC can be calculated by determining the change of consumption divided by the change in income. The value of MPC will range between 0 and 1.

Explanations:

Marginal Propensity to Consume or MPC is dependent on the income level. It may vary with the income levels and it can be seen that MPC is lower at highs income levels. MPC can be calculated by determining the change of consumption divided by the change in income. The value of MPC will range between 0 and 1.