Final answer:
A proportional increase in disposable income and Other Income Determinants leads to a rise in consumption, which is typically smaller than the rise in income, showing a marginal propensity to consume less than 1. It also results in a decline in the average propensity to consume. Consumption changes relate to preferences and the elasticity of demand for different goods.
Step-by-step explanation:
A proportional increase in disposable income (SID) and Other Income Determinants (OID) results in various economic behaviors. When disposable income increases, consumers have more money to spend, which typically leads to an increase in consumption. However, this increase in consumption tends to be smaller than the increase in disposable income, indicating a marginal propensity to consume that is less than 1. Furthermore, with more disposable income, the average propensity to consume generally declines because as income rises, a smaller proportion of it may be needed for consumption.
Factors influencing consumption patterns can include changes in consumer income levels, product price increases or decreases, the number of buyers in the market, and the availability of related products. A taste shift toward greater popularity of a product, a rise in the population likely to purchase, an increase in income (particularly for normal goods), and a price increase of substitute goods can all lead to higher consumption of a particular good.
In terms of economics and budget constraints, a rise in income will shift the budget constraint to the right, allowing the consumer to reach a higher indifference curve, thus attaining a higher level of utility. The percentage increase in consumption of various goods (like books and doughnuts) due to a rise in income depends on individual preferences and the elasticity of demand for those goods. It may not necessarily be a uniform increase across all goods consumed.