SECTION-A (Macro-economics) If income rises from \₹ 50,000 to \₹ 60,000, consumption increases from \₹ 40,000 to \₹ 48,000 . In this situation, what will be the value of Marginal Propensity to Consume (MPC) ? (Choose the correct alternative.)

CBSE 2020 Class 12 Economics Outside Delhi Set 2 - Question 1

Question : 1 of 3

Marks: +1, -0

SECTION-A

(Macro-economics)

If income rises from

\₹ 50,000

\₹ 60,000

, consumption increases from

\₹ 40,000

\₹

48,000 . In this situation, what will be the value of Marginal Propensity to Consume (MPC) ?
(Choose the correct alternative.)

Solution:

(a) 0.80
Marginal Propensity to consume (MPC)

\;\;\text " MPC "\;=\;{\;\text " Change in Consumption "\;}/{\;\text " Change in Income "\;}

\;\;\text " MPC "\;=\;{∆ {\C}}/{∆ {\Y}}=\;{8,000}/{10,000}=0.80

Working Note : Change in consumption

\;=\₹ 48,000-\₹ 40,000=\₹ 8,000

\;\text " Change in Income "\;\;

=\₹ 60,000-\₹ 50,000=\₹ 10,000

Go to Question:

Next Question