Homework Answers
Using Formula, C=Co+MPC*Y,where "C"=Total Consumption,"Co"= Autonomous Consumption,MPC=Marginal Propensity bto Consume,"Y"=Disposable Income,
Now,From Table-
12000=Co+MPC*10,000-------(1)
20000=Co+MPC*20,000-------(2)
Multiplying (1) by 2 and subtracting (2) we get-
4000=Co Hence, Autonomous Consumption is $4,000
Putting Co in equation (1) we get 8000=MPC*10000 gives MPC=0.8, MPS=1-MPC=1-0.8=0.2 so,MPS=0.2 and MPC=0.8
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