Question : The average propensity to consume (APC) is 0.6. If disposable income is INR 5,000, what is the level of consumption?
Option 1: INR 2,500
Option 2: INR 3,000
Option 3: INR 6,000
Option 4: INR 8,333.33
Correct Answer: INR 3,000
Solution : The correct answer is (B). INR 3,000.
The average propensity to consume (APC) is the proportion of disposable income that is consumed. It is calculated by dividing consumption by disposable income. In this case, the APC is 0.6, which means that 60% of disposable income is consumed. If disposable income is INR 5,000, then consumption is 0.6 * INR 5,000 = INR 3,000.
Therefore, the level of consumption is INR 3,000.
Question : The average propensity to consume (APC) is 0.75. If disposable income is INR 6,000, what is the level of consumption?
Question : The consumption function is given by C = 800 + 0.6Y. If disposable income is INR 5,000, what is the level of consumption?
Question : The consumption function is given by C = 600 + 0.8Y. If disposable income is INR 3,000, what is the level of consumption?
Question : The consumption function is given by C = 500 + 0.75Y. If disposable income is INR 4,000, what is the level of consumption?
Question : The marginal propensity to consume (MPC) is 0.9. If disposable income increases by INR 2,000, what will be the increase in consumption?
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