QNO2 In the linear consumption function cons = Bo + B₁inc, the (estimated) marginal propensity to consume (MPC) out of income is simply the slope, B1, while the average propensity to consume (APC) is cons/inc = Bolinc + B₁. Using observations for 100 families on annual income and consumption (both measured in dollars), the following equation is obtained: cons 124.84 +0.853 inc n =100, R2 = 0.692. Interpret the intercept in this equation, and comment on its sign and magnitude. (ii) What is the predicted consumption when family income is $30,000? (iii) With inc on the x-axis, draw a graph of the estimated MPC and APC.

QNO2 In the linear consumption function cons = Bo + B₁inc, the (estimated) marginal propensity to consume (MPC) out of income is simply the slope, B1, while the average propensity to consume (APC) is cons/inc = Bolinc + B₁. Using observations for 100 families on annual income and consumption (both measured in dollars), the following equation is obtained: cons 124.84 +0.853 inc n =100, R2 = 0.692. Interpret the intercept in this equation, and comment on its sign and magnitude. (ii) What is the predicted consumption when family income is $30,000? (iii) With inc on the x-axis, draw a graph of the estimated MPC and APC.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 8E: Bell Greenhouses has estimated its monthly demand for potting soil to be the following: N=400+4X...

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