Explain why current consumption is likely to respond less than one for one to changes in current income
What will be an ideal response?
A change in current income is not likely to be viewed with certainty as permanent. So, part of any change in temporary income will be saved and, therefore, consumption will increase by an amount less than the change in income. If the change were permanent, the change in C would be greater.
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Corn is used to produce tortillas. If the price of corn increases
A) the demand for tortillas decreases. B) the supply of tortillas increases. C) the supply of tortillas decreases. D) the demand for tortillas increases.
Tom and Jack are the only two local gas stations. Although they have different constant marginal costs, they both survive continued competition. Tom and Jack do NOT constitute a:
A. Bertrand oligopoly. B. Sweezy oligopoly. C. Stackelberg oligopoly. D. Cournot oligopoly.