CBSE 2016 Class 12 Economics Delhi Set-3 | Question 2

CBSE 2016 Class 12 Economics Delhi Set-3

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Question : 2

Total: 5

In an economy an increase in investment by ₹100 crore led to 'increase' in national income by ₹ 1,000 crore. Find marginal propensity to consume.

Solution:

Given,
∆I‌=₹100‌ crore ‌
∆Y‌=₹1,000‌ crore ‌
MPC‌=?
K‌=‌

∆Y

∆I

K‌=‌

1

1−MPC

‌

1

1−MPC

‌=‌

∆Y

∆I

‌

1

1−MPC

‌=‌

1,000

100

‌

1

1−MPC

‌=10
1‌=10−10‌MPC
−9‌=−10‌MPC
MPC‌=‌

9

10

=0.9

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