Write an equation for a straight line upward rising consumption function starting from Y axis. Also draw the diagram?

Question

Answer

Y=mx+c

Answer

Equation for a Straight Line Upward Rising Consumption Function Starting from Y Axis

A consumption function represents the relationship between disposable income and consumption. It shows how much people are willing to spend on consumption goods at different levels of income.

Straight Line Upward Rising Consumption Function Equation

A straight line upward rising consumption function can be represented by the equation:

C = a + bY

C: Consumption

a: Autonomous consumption

b: Marginal propensity to consume (MPC)

Y: Disposable income

The MPC represents the proportion of additional income that people spend on consumption. In a straight line upward rising consumption function, the MPC is positive, which means that as income increases, consumption also increases.

Diagram of a Straight Line Upward Rising Consumption Function

The following diagram shows a straight line upward rising consumption function:

The vertical axis represents consumption, while the horizontal axis represents disposable income. The slope of the line represents the MPC, which is positive in this case.

At zero income, the level of consumption is represented by the autonomous consumption (a). As income increases, the consumption also increases along the line. The MPC shows the rate at which consumption increases with an increase in income.

Conclusion

A straight line upward rising consumption function is a representation of the relationship between disposable income and consumption. The equation for this function is C = a + bY, where the MPC is positive. The diagram of this function shows that as income increases, consumption also increases along the line.

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