The graph represents consumption (C) as a function ofdisposable income (DI). Assume the consumption function islinear. What is the value of the marginal propensity toconsume (MPC)?Round the value of the MPC to two decimal places.MPC =Consumption$10509007506004503001500$150 300450600C = DIC750 900 1050Disposable income

MPC stands Marginal Propensity to consume which show the relationship between income and consumption…

The graph represents consumption (C) as a function of isposable income (DI). Assume the consumption function is near. What is the value of the marginal propensity to onsume (MPC)? Cound the value of the MPC to two decimal places. MPC = Consumption $1050 900 750 600 450 300 150 C = DI C

The graph represents consumption (C) as a function of isposable income (DI). Assume the consumption function is near. What is the value of the marginal propensity to onsume (MPC)? Cound the value of the MPC to two decimal places. MPC = Consumption $1050 900 750 600 450 300 150 C = DI C

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The graph represents consumption (C) as a function of
disposable income (DI). Assume the consumption function is
linear. What is the value of the marginal propensity to
consume (MPC)?
Round the value of the MPC to two decimal places.
MPC =
Consumption
$1050
900
750
600
450
300
150
0
$150 300
450
600
C = DI
C
750 900 1050
Disposable income

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these bottom two are solved I am just struggling with how to graph the consumption function and the breakeven condition for this problem and to Point out the income and consumption values relevant for these problems: 3. The marginal propensity to consume (MPC) is 0.75, which means that households spend 75% of each additional dollar of income. The starvation-level consumption is 6, which means that households will consume at least 6 dollars, regardless of their income. Therefore, the amount that households will save can be found by subtracting their minimum consumption level from their gross income, multiplying the difference by the MPC, and subtracting the lump-sum tax: Savings = (1 - MPC) * (Gross Income - Starvation-level Consumption) - Lump-sum Tax Savings = (1 - 0.75) * (40 - 6) - 10 Savings = 0.25 * 34 - 10 Savings = 1.5 Therefore, households will save $1.5. 3. a) How should the lump-sum income tax change to allow households to save 3? To allow households to save…