Question

When Julie Ann's disposable income is $10,000, she spends $10,000 and when her disposable income is $15,000, her spending is $12,500. Julie Ann's autonomous consumption is ________ and her ___________.

A.
$5,000; MPC = 0.50

B.
$10,000; MPS = 0.50

C.
$0; MPC = 0.50

D.
$0; MPS = 0.50

E.
$5,000; MPC = 1.

Answer 1

The correct answer is B.

Step-by-step explanation:

Giving the following information:

When Julie Ann's disposable income is $10,000, she spends $10,000 and when her disposable income is $15,000, her spending is $12,500.

The autonomous consumption is the minimum that one person consumes regardless of the income.

autonomous consumption=10,000

Marginal propensity to consume= variation on consumption/variation on income

Marginal propensity to consume= 2,500/5,000= 0.5