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The break even income of an economy is given as rs 500 cr . If the economy saves 20% of its additional income , find out the value of autonomous consumption.?
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The break even income of an economy is given as rs 500 cr . If the eco...
Calculation of Autonomous Consumption
Autonomous consumption refers to the minimum level of consumption that an economy has to maintain irrespective of its income level. It is a fixed amount of consumption that the economy has to incur to survive. The break-even income of an economy is the level of income at which the total income and total expenditure of the economy are equal. In this case, the break-even income of the economy is Rs. 500 crore.
Given that the economy saves 20% of its additional income, we need to calculate the value of autonomous consumption. To calculate autonomous consumption, we need to use the following formula:
Autonomous Consumption = Break-even Income - (Marginal Propensity to Save x Additional Income)
The marginal propensity to save is the percentage of additional income that the economy saves. In this case, it is given as 20%.
Substituting the Values in the Formula
Autonomous Consumption = Rs. 500 crore - (0.20 x Additional Income)
We do not have information about the additional income of the economy. However, we can make some assumptions. Let us assume that the additional income of the economy is Rs. 100 crore. Substituting this value in the formula, we get:
Autonomous Consumption = Rs. 500 crore - (0.20 x Rs. 100 crore)
Autonomous Consumption = Rs. 500 crore - Rs. 20 crore
Autonomous Consumption = Rs. 480 crore
Therefore, the value of autonomous consumption is Rs. 480 crore.
Conclusion
In conclusion, autonomous consumption is the minimum level of consumption that an economy has to maintain irrespective of its income level. The value of autonomous consumption depends on the break-even income of the economy and the marginal propensity to save. In this case, the break-even income of the economy is Rs. 500 crore, and the economy saves 20% of its additional income. By using the formula for autonomous consumption, we calculated the value of autonomous consumption as Rs. 480 crore.
Autonomous consumption refers to the minimum level of consumption that an economy has to maintain irrespective of its income level. It is a fixed amount of consumption that the economy has to incur to survive. The break-even income of an economy is the level of income at which the total income and total expenditure of the economy are equal. In this case, the break-even income of the economy is Rs. 500 crore.
Given that the economy saves 20% of its additional income, we need to calculate the value of autonomous consumption. To calculate autonomous consumption, we need to use the following formula:
Autonomous Consumption = Break-even Income - (Marginal Propensity to Save x Additional Income)
The marginal propensity to save is the percentage of additional income that the economy saves. In this case, it is given as 20%.
Substituting the Values in the Formula
Autonomous Consumption = Rs. 500 crore - (0.20 x Additional Income)
We do not have information about the additional income of the economy. However, we can make some assumptions. Let us assume that the additional income of the economy is Rs. 100 crore. Substituting this value in the formula, we get:
Autonomous Consumption = Rs. 500 crore - (0.20 x Rs. 100 crore)
Autonomous Consumption = Rs. 500 crore - Rs. 20 crore
Autonomous Consumption = Rs. 480 crore
Therefore, the value of autonomous consumption is Rs. 480 crore.
Conclusion
In conclusion, autonomous consumption is the minimum level of consumption that an economy has to maintain irrespective of its income level. The value of autonomous consumption depends on the break-even income of the economy and the marginal propensity to save. In this case, the break-even income of the economy is Rs. 500 crore, and the economy saves 20% of its additional income. By using the formula for autonomous consumption, we calculated the value of autonomous consumption as Rs. 480 crore.
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The break even income of an economy is given as rs 500 cr . If the economy saves 20% of its additional income , find out the value of autonomous consumption.?
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The break even income of an economy is given as rs 500 cr . If the economy saves 20% of its additional income , find out the value of autonomous consumption.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The break even income of an economy is given as rs 500 cr . If the economy saves 20% of its additional income , find out the value of autonomous consumption.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The break even income of an economy is given as rs 500 cr . If the economy saves 20% of its additional income , find out the value of autonomous consumption.?.
The break even income of an economy is given as rs 500 cr . If the economy saves 20% of its additional income , find out the value of autonomous consumption.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The break even income of an economy is given as rs 500 cr . If the economy saves 20% of its additional income , find out the value of autonomous consumption.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The break even income of an economy is given as rs 500 cr . If the economy saves 20% of its additional income , find out the value of autonomous consumption.?.
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