What happens to the apc as income rises

Reference no: EM131302533

Graph the following two consumption functions:

a. For each function, calculate and graph the average propensity to consume (APC) when income is $100, $400, and $800.

b. For each function, what happens to the APC as income rises?

c. For each function, what is the relationship between the APC and the marginal propensity to consume? d. Under the first consumption function, a family with income of $50,000 consumes a smaller proportion of its income than a family with income of $20,000; yet if we take a dollar of income away from the rich family and give it to the poor family, total consumption by the two families does not change. Explain how this is possible.

Reference no: EM131302533

Questions Cloud

How should jetson decide on the optimal level of inventory : In the short run, the percentage increase in output tends to correspond to a smaller percentage decrease in the unemployment rate due to "slippages." Explain the three slippages between changes in output and changes in the unemployment rate.

Evaluate two proposed alternatives regarding insulin pump : Evaluate the two proposed alternatives regarding the insulin pump.- Based upon your evaluation identify which alternative should be selected and support your decision.

Should certified bmw be concerned about multicollinearity : Should Certified BMW be concerned about multicollinearity in this equation? Why or why not? If multicollinearity is a problem, how would you address it in this estimation? Use the regression equation to predict price for the first observation in th..

What was the significance of abstract expressionism : What was the significance of Abstract Expressionism? Explain the reasons for your views - even if you do not like or understand, what do you think its purpose at this time in history was that influenced this style?

What happens to the apc as income rises : For each function, calculate and graph the average propensity to consume (APC) when income is $100, $400, and $800.

What other ways are there to address the threat : What other ways are there to address the threat?What do you think would be the most effective way to address this threat?

Does the current accounting framework meet the needs : ACC303 Contemporary Issues in Accounting T316 - Does the current accounting framework meet the needs of the users of financial reports as prescribed in the objective of the Conceptual Framework of Accounting? How the conceptual framework revision t..

What two elements of the cia triad are referenced in law : What two elements of the CIA triad are referenced in this law, and in what section number(s)? When a disclosure notification is required, in what three methods may notification be provided, and in what section number do you find the answer?

What is it about and how does it impact the employer : What is the new CEO Pay Ratio? What is it about and how does it impact the Employer? What are some of the concerns? Should executive salaries be controlled is all companies, public & private alike?

User Account

All Pages