Need help with this, please show me where to plot the two points on the graph as well. Thanks! **Question:**Suppose now that the country’s national income increases to $35 billion. Assuming the amount paid in taxes is fixed at $12 billion and the marginal propensity to consume (MPC) is 0.7, what will be the new household consumption?- ◯ $21.6 billion- ◯ $22.3 billion- ◯ $23.7 billion- ◯ $19.5 billion**Explanation:**In this problem, we need to calculate the new household consumption. Given that the national income is $35 billion and taxes are $12 billion, the disposable income is calculated as follows:Disposable Income = National Income - Taxes = $35 billion - $12 billion = $23 billion.The household consumption can be calculated using the formula:Consumption = MPC × Disposable Income.Thus, the new household consumption is:Consumption = 0.7 × $23 billion = $16.1 billion.(Note: There seems to be an inconsistency because none of the given options match this calculation. Review the problem and options to ensure accuracy. It’s possible that additional context or details are needed for accurate computation.) ### Text and Graph Description for Educational WebsiteConsider a country with the national income of $30 billion, the amount of taxes paid by households of $12 billion, and household consumption of $16 billion. Suppose that the marginal propensity to consume (MPC) is 0.7.**On the following graph, use the blue line (circle symbol) to plot the economy’s consumption function.****Hint:** You should plot the first point where household consumption equals $16 billion. Then, plot the second point when real disposable income rises by $10 billion.#### Graph Explanation- **Axes and Units:** - The x-axis represents Real Disposable Income in billions of dollars, ranging from 0 to 50. - The y-axis represents Real Consumption in billions of dollars, ranging from 0 to 50.- **Plotted Points:** - The first point is plotted at a Real Disposable Income of approximately $18 billion (calculated as $30 billion national income - $12 billion taxes) and Real Consumption of $16 billion. - The second point is plotted at a Real Disposable Income of $28 billion (an increase of $10 billion from the first point) and Real Consumption of $23 billion. This reflects the MPC calculation, where MPC = 0.7 means that for every additional dollar of income, consumption increases by 70 cents.- **Line:** - The blue line with circle symbols represents the Consumption Function, connecting the two plotted points.This graph illustrates the relationship between real disposable income and real consumption, highlighting the impact of changes in disposable income on consumption based on the given MPC.

We have given that MPC=0.7 tax= 12 billion and for these C=16 billion

Suppose now that country's national income increases to $35 billion. Assuming the amount paid in taxes is fixed at $12 billion and MPC = 0.7, what will be the new household consumption? O $21.6 billion O $22.3 billion O $23.7 billion O $19.5 billion

Suppose now that country's national income increases to $35 billion. Assuming the amount paid in taxes is fixed at $12 billion and MPC = 0.7, what will be the new household consumption? O $21.6 billion O $22.3 billion O $23.7 billion O $19.5 billion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Need help with this, please show me where to plot the two points on the graph as well. Thanks!

**Question:**

Suppose now that the country’s national income increases to $35 billion. Assuming the amount paid in taxes is fixed at $12 billion and the marginal propensity to consume (MPC) is 0.7, what will be the new household consumption?

- ◯ $21.6 billion
- ◯ $22.3 billion
- ◯ $23.7 billion
- ◯ $19.5 billion

**Explanation:**

In this problem, we need to calculate the new household consumption. Given that the national income is $35 billion and taxes are $12 billion, the disposable income is calculated as follows:

Disposable Income = National Income - Taxes = $35 billion - $12 billion = $23 billion.

The household consumption can be calculated using the formula:

Consumption = MPC × Disposable Income.

Thus, the new household consumption is:

Consumption = 0.7 × $23 billion = $16.1 billion.

(Note: There seems to be an inconsistency because none of the given options match this calculation. Review the problem and options to ensure accuracy. It’s possible that additional context or details are needed for accurate computation.)

### Text and Graph Description for Educational Website

Consider a country with the national income of $30 billion, the amount of taxes paid by households of $12 billion, and household consumption of $16 billion. Suppose that the marginal propensity to consume (MPC) is 0.7.

**On the following graph, use the blue line (circle symbol) to plot the economy’s consumption function.**

**Hint:** You should plot the first point where household consumption equals $16 billion. Then, plot the second point when real disposable income rises by $10 billion.

#### Graph Explanation

- **Axes and Units:**
- The x-axis represents Real Disposable Income in billions of dollars, ranging from 0 to 50.
- The y-axis represents Real Consumption in billions of dollars, ranging from 0 to 50.

- **Plotted Points:**
- The first point is plotted at a Real Disposable Income of approximately $18 billion (calculated as $30 billion national income - $12 billion taxes) and Real Consumption of $16 billion.
- The second point is plotted at a Real Disposable Income of $28 billion (an increase of $10 billion from the first point) and Real Consumption of $23 billion. This reflects the MPC calculation, where MPC = 0.7 means that for every additional dollar of income, consumption increases by 70 cents.

- **Line:**
- The blue line with circle symbols represents the Consumption Function, connecting the two plotted points.

This graph illustrates the relationship between real disposable income and real consumption, highlighting the impact of changes in disposable income on consumption based on the given MPC.

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