haileyglowiak2448 haileyglowiak2448
  • 02-03-2020
  • Business
contestada

Here is a consumption function: C = C0 + MPC(Yd). If consumption is $2,000, MPC =0.75, and disposable income is $2,000, what does autonomous consumption equal?

Respuesta :

ewomazinoade ewomazinoade
  • 04-03-2020

Answer:

$500

Explanation:

$2,000 = Co + 0.75 x $2,000

$2,000 = Co + $1,500

Co = $500

Autonomous consumption is consumption that would occur even if a person earns zero income. This consumption isn't dependent on the level of income.

MPC is the marginal propensity to consume. It represents the proportion of disposable income that is spent on consumption.

Disposable income is income less taxes.

I hope my answer helps you

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