CBSE 2018 Class 12 Economics Re-Exam

Question : 8

Total: 15

What is ex-Ante consumption ? Distinguish between autonomous consumption and induced consumption.

Solution:

Ex-Ante consumption refers to planned or desired consumption expenditure of households. Consumption function is represented by :

C=C+bY
Where,
C= Consumption expenditure
C= Autonomous consumption
b= Marginal propensity to consume (MPC)
Y= National Income
Difference between Autonomous and Induced consumption :

Autonomous Consumption	Induced Consumption
(i) When consumption accurs even at zero level of income, this is called as Autonomous consumption.	When consumption increases by increase in income, it is known as induced consumption.
(ii) It is generally done in government sector.	It is generally done in private sector.
(iii) It is income inelastic, i.e., it is not affected by change in income level.	It is income elastic. i.e., it is affected by change in income level.

Go to Question:

Prev Question

Next Question