Question

If income rises from $12,000 to $12,400 and consumption rises from $11,800 to $12,176, the marginal propensity to consume is _____ percent.

Answer 1

0.94%

Step-by-step explanation:

Income rises from $12,000 to $12,400

$12,400-$12,000

= $400

Consumption rises from $11,800 to $12,176

= $12,176-$11,800

= $376

Therefore the marginal propensity to consume can be calculated as follows

= 376/400

= 0.94

Hence the marginal propensity to consume is 0.94%