Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Expenditures
8000
6000
4000
2000
Disposable
Income
2000
4000
6000
2000 4000 6000
Disposable Income
Saving
8000
lo
Table 3
(Total)
Consumption
Autonomous
Consumption
Induced
Consumption
Expert Solution

Step 1
Disposable income refers to the net income which is available to a consumer to spend on goods and services after the tax deductions .
Autonomous Consumption : Fixed Level of consumption which is independent of the income level . Simply the amount of consumption user will have even if the income level is zero .
Induced Consumption : Consumption dependent on the level on income .
Savings = INCOME - Expenditure
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