Answer to Question #128975 in Economics of Enterprise for Fatimah

Question

Suppose we have the consumption function C=10+ tha marginal prospensity to consume is

Answer 1

Given the consumption function, we know that marginal propensiy to consume is arrived at by dividing marginal consumption over the marginal income.

MPC= Change in consumption/ change in disposable income

Consumption function: C= 10x

MPC= 10 after differentiating the function in respect to x