Mathematically, the marginal propensity to consume is
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A. B. C. D.B
The marginal propensity to consume is found according to the following equation:
MPC = total change in consumption / total change in income
The marginal propensity to consume (MPC) is a concept used in economics to measure the change in consumption resulting from a change in income. It represents the proportion of an additional increment of income that individuals choose to spend on consumption.
The correct answer is B. additional consumption divided by additional income.
To understand why, let's break down the answer choices:
A. Income divided by consumption: This ratio does not represent the marginal propensity to consume since it measures the average propensity to consume (APC), which is the total consumption divided by total income.
B. Additional consumption divided by additional income: This ratio represents the marginal propensity to consume (MPC). It shows the change in consumption resulting from a change in income. By dividing the additional consumption by the additional income, we can determine the proportion of the income increase that individuals choose to spend on consumption.
C. Consumption divided by income: This ratio represents the average propensity to consume (APC), not the marginal propensity to consume. It measures the proportion of total income that individuals spend on consumption, but it does not capture the change in consumption resulting from a change in income.
D. Additional income divided by additional consumption: This ratio represents the inverse of the marginal propensity to consume, not the MPC itself. It measures the change in income resulting from a change in consumption. While related, it is not the same as the MPC.
In summary, the correct answer is B. The marginal propensity to consume is the additional consumption divided by additional income.