Find the change in saving 2/3 of additional income is always spent on ...
Change in Saving with Additional Income
In this question, we are asked to find the change in saving when 2/3 of additional income is always spent on consumption and the current income is 50%, given that the initial income is 50000.
Understanding the Problem
Let's first understand the problem statement:
- Initial income = 50000
- Current income = 50% of initial income = 0.5 * 50000 = 25000
- 2/3 of additional income is always spent on consumption
Now, let's assume that the additional income is x.
- Consumption expenditure = 2/3 of x
- Saving = x - 2/3 of x = 1/3 of x
Therefore, the total income after the additional income is:
- Total Income = Initial Income + Additional Income = 50000 + x
- Consumption Expenditure = Current Income + 2/3 of Additional Income = 25000 + 2/3x
- Saving = Total Income - Consumption Expenditure = (50000 + x) - (25000 + 2/3x) = 25000 + 1/3x
Calculating the Change in Saving
Now, we need to find the change in saving. Let's assume that the additional income is y.
- Initial Income = 50000
- Current Income = 50% of Initial Income = 25000
- Total Income = Initial Income + Additional Income = 50000 + y
- Consumption Expenditure = Current Income + 2/3 of Additional Income = 25000 + 2/3y
- Saving = Total Income - Consumption Expenditure = (50000 + y) - (25000 + 2/3y) = 25000 + 1/3y
Now, the change in saving can be calculated as:
- Change in Saving = New Saving - Old Saving
- Change in Saving = (25000 + 1/3y) - (25000 + 1/3x)
- Change in Saving = 1/3(y - x)
Therefore, the change in savings is directly proportional to the difference between the additional income and the initial income, and is independent of the absolute values of the incomes.