(Advanced analysis) Suppose that the linear equation for consumption in a hypothetical economy is C = 50 + 0.9 Y. Also suppose that income (Y) is $400. Determine the following: (a) MPC; (b) MPS; (c) level of consumption; (d) APC; (e) APS.
What will be an ideal response?
MPC = 0.9; MPS = 0.1; At Y = 400, C = $410; At Y = $400, APC = 410/400 = 1.025; and APS =
(?.025).
You might also like to view...
If the banking system has a required reserve ratio of 25 percent, then the money multiplier is
A) 2. B) 4. C) 5. D) 10.
If the elasticity of supply of a good is zero, then its
A) supply curve is vertical. B) supply curve is horizontal. C) demand curve must be vertical. D) supply curve is positively sloped.
Which of the following is an example of resources that are substitutes?
a. steel and glass used in auto manufacturing b. glue and wood used in furniture manufacturing c. buttons and cotton used in shirt manufacturing d. leather and rubber used in basketball manufacturing e. eggs and flour used in baking
If the price of automobiles were to decrease substantially, the demand curve for automobiles would most likely
A) shift rightward. B) shift leftward. C) remain unchanged. D) become steeper.