Q.3 Suppose that the consumption function is defined as C=a+b(1-k)Y-bT where a-bT =0 and both lump-sum tax (T ) and tax rate (k) are constant. This consumption function yield: A. MPC will decrease as income increase since a-bT 0 B. MPC will increase as income increase C. APC will decrease as income increase D. APC will remain the same as income increase E. APC will increase as income increase

Q.3 Suppose that the consumption function is defined as C=a+b(1-k)Y-bT where a-bT =0 and both lump-sum tax (T ) and tax rate (k) are constant. This consumption function yield: A. MPC will decrease as income increase since a-bT 0 B. MPC will increase as income increase C. APC will decrease as income increase D. APC will remain the same as income increase E. APC will increase as income increase

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.3P

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