Test Index

CBSE 2020 Class 12 Economics Outside Delhi Set 2

© examsnet.com
Question : 1 of 3
Marks: +1, -0
SECTION-A
(Macro-economics)
If income rises from ₹50,000\text{₹} 50,000 to ₹60,000\text{₹} 60,000, consumption increases from ₹40,000\text{₹} 40,000 to ₹\text{₹} 48,000 . In this situation, what will be the value of Marginal Propensity to Consume (MPC) ?
(Choose the correct alternative.)
Solution:  
(a) 0.80
Marginal Propensity to consume (MPC)
     MPC   =     Change in Consumption      Change in Income   \;\;\text{ MPC }\;=\;\frac{\;\text{ Change in Consumption }\;}{\;\text{ Change in Income }\;}
     MPC   =  ΔCΔY  =  8,00010,000=0.80\;\;\text{ MPC }\;=\;\frac{\Delta C}{\Delta Y}\;=\;\frac{8,000}{10,000}=0.80
Working Note : Change in consumption
  =₹48,000−₹40,000=₹8,000\;=\text{₹} 48,000-\text{₹} 40,000=\text{₹} 8,000
   Change in Income     \;\text{ Change in Income }\;\; =₹60,000−₹50,000=₹10,000=\text{₹} 60,000-\text{₹} 50,000=\text{₹} 10,000
© examsnet.com
Go to Question:
Next Question