IGNOU BECC 102 2025 2026 - Find the marginal propensity to consume (MPC) and average propensity t

Question

Find the marginal propensity to consume (MPC) and average propensity to consume (APC)

26 Mar 2026

Answer :

Word Count : 195

The marginal propensity to consume (MPC) is the change in consumption (ΔC) divided by the change in income (ΔY). Mathematically, [ MPC = \frac{\Delta C}{\Delta Y} ] The average propensity to consume (APC) is the ratio of consumption (C) to income (Y): [ APC = \frac{C}{Y} ] Assume the aggregate consumption function is ( C = 0.9Y + 100 ). Step 1: Calculate MPC The MPC is the coefficient of Y in the consumption

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