CBSE 2020 Class 12 Economics Outside Delhi Set 2

Question : 1

Total: 3

SECTION-A

(Macro-economics)

If income rises from ₹50,000 to ₹60,000, consumption increases from ₹40,000 to ₹ 48,000 . In this situation, what will be the value of Marginal Propensity to Consume (MPC) ?
(Choose the correct alternative.)

0.80
0.20
0.10
0.90

Solution:

(a) 0.80
Marginal Propensity to consume (MPC)
‌‌ MPC ‌=‌

‌ Change in Consumption ‌

‌ Change in Income ‌

‌‌ MPC ‌=‌

∆C

∆Y

=‌

8,000

10,000

=0.80
Working Note : Change in consumption
‌=₹48,000−₹40,000=₹8,000
‌ Change in Income ‌‌ =₹60,000−₹50,000=₹10,000

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