Define and explain how we calculate the marginal propensity to consume and the marginal propensity to save
What will be an ideal response?
The marginal propensity to consume is the proportion of an increase in disposable income that is consumed. In terms of a formula, the marginal propensity to consume, or MPC, can be calculated as ?C/?YD, where ? means "change in." The marginal propensity to save is the proportion of an increase in disposable income that is saved. In terms of a formula, the marginal propensity to save, or MPS, can be calculated as ?S/?YD.
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When allocating resources using market price
A) everyone who is willing and able to pay for a good gets one. B) everyone who wants a good gets one. C) everyone who is willing to pay for a good gets one. D) everyone who is able to pay for a good gets one.
The demand for a product is more elastic
a. When it has few substitutes b. In the long-run c. When the expenditure on the product represent a small portion of the budget d. When the product is broadly defined