Question

Individual current disposable income Income and Expenditure -- End of Chapter Problems 3. Economists observed the only five residents of a very small economy and estimated each one's consumer spending at various levels of current disposable income. The accompanying table shows each resident's consumer spending at three income levels. Individual consumer spending by $0 $40,000 Andre $29,000 22,500 Barbara $20,000 $15,000 12,500 20,000 17,000 19,000 $1,000 2,500 2,000 5,000 4,000 Casey Declan 38,000 29,000 34,000 Elena a. What is the marginal propensity to consume for each resident? Enter your answer in decimal form. Andre's MPC: Barbara's MPC: Casey's MPC: Declan's MPC: Elena's MPC:

Answer 1

MP C= ДС Andre's MPC = =10.7 14000 20 000 Barbara's MPC - 10.5 10000 20 ODD Casey's = 10.91 MPC = 18000 20 000 12000 2000D = 10.6 Dedain is MP C = 10-15 Elena's MP C = 1500 20 ovo

Each resident's consumption function Andre , c = 1000+ 0.74 Baxbaxa, c = 2500 + 0.54 Casey C = 2000 to.gy Declan a = 5000 t 0.64 Elena gC = 4000 + 0.154 (6.) to consume Marginal for the propensity economy ? Answer = 83500- 14500 20 oos X5 consumption function of the economy = 14 500+ 0.694