The figure given below shows the consumption function of a household.In Figure 9.2. consumption equals disposable income:
a. at point B only.
b. at point A only.
c. at points A and C only. O
d. at point C only. e. at all points on the consumption function.
Homework Answers
Answer
Vertical axis represents consumption expenditure and horizontal axis represents disposable.
45 degree line passing through the origin represents points where Consumption = Disposable income(it does not means that here Consumption = Disposable income at all of this points for this consumption function).
Point where Consumption = disposable income for this consumption function is a point where consumption function intersects 45 degree line. We can see from above that consumption function intersect 45 degree line at point B, thus we have Consumption = disposable income at point B for this consumption function
Hence, the correct answer is (a) at point B only.
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