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Identify the correct statement from the following:
A. Consumption curve starts from the origin
B. The sum of APC and APS is equal to 1
C. Aggregate demand and market demand mean the same
D. The value of MPC and MPS varies between 0 and 1
E. At breakeven point sav ing is zero
Choose the correct answer from the options given below:
A. Consumption curve starts from the origin
B. The sum of APC and APS is equal to 1
C. Aggregate demand and market demand mean the same
D. The value of MPC and MPS varies between 0 and 1
E. At breakeven point sav ing is zero
Choose the correct answer from the options given below:
- a)A, D, E only
- b)B, C, D only
- c)B, D, E only
- d)A, C, E only
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
Identify the correct statement from the following:A. Consumption curve...
The correct statement from the given options is:
B. The sum of APC and APS is equal to 1.
Explanation:
1. Consumption curve starts from the origin:
The consumption curve represents the relationship between disposable income and consumption. It shows the level of consumption at different levels of income. The consumption curve does not necessarily start from the origin because even at zero income, individuals may still have some level of consumption. Therefore, statement A is incorrect.
2. The sum of APC and APS is equal to 1:
APC (Average Propensity to Consume) is the ratio of consumption expenditure to disposable income, while APS (Average Propensity to Save) is the ratio of saving to disposable income. Since consumption and saving are the two components of disposable income, their sum should equal 1. If individuals are consuming more, they are saving less, and vice versa. Therefore, statement B is correct.
3. Aggregate demand and market demand mean the same:
Aggregate demand refers to the total demand for goods and services in an economy at a given price level and time period. It includes the demand from households, businesses, government, and net exports. On the other hand, market demand refers to the demand for a particular good or service in a specific market. Therefore, aggregate demand and market demand are not the same. Hence, statement C is incorrect.
4. The value of MPC and MPS varies between 0 and 1:
MPC (Marginal Propensity to Consume) is the change in consumption resulting from a change in disposable income, while MPS (Marginal Propensity to Save) is the change in saving resulting from a change in disposable income. Both MPC and MPS can range from 0 to 1, indicating the proportion of additional income that is consumed or saved. Therefore, statement D is correct.
5. At the breakeven point, saving is zero:
The breakeven point is the level of income at which consumption expenditure equals disposable income. At this point, individuals are neither saving nor borrowing. However, it does not mean that saving is zero. Saving can still occur at other income levels, either positive or negative. Hence, statement E is incorrect.
In summary, the correct statement from the given options is B. The sum of APC and APS is equal to 1.
B. The sum of APC and APS is equal to 1.
Explanation:
1. Consumption curve starts from the origin:
The consumption curve represents the relationship between disposable income and consumption. It shows the level of consumption at different levels of income. The consumption curve does not necessarily start from the origin because even at zero income, individuals may still have some level of consumption. Therefore, statement A is incorrect.
2. The sum of APC and APS is equal to 1:
APC (Average Propensity to Consume) is the ratio of consumption expenditure to disposable income, while APS (Average Propensity to Save) is the ratio of saving to disposable income. Since consumption and saving are the two components of disposable income, their sum should equal 1. If individuals are consuming more, they are saving less, and vice versa. Therefore, statement B is correct.
3. Aggregate demand and market demand mean the same:
Aggregate demand refers to the total demand for goods and services in an economy at a given price level and time period. It includes the demand from households, businesses, government, and net exports. On the other hand, market demand refers to the demand for a particular good or service in a specific market. Therefore, aggregate demand and market demand are not the same. Hence, statement C is incorrect.
4. The value of MPC and MPS varies between 0 and 1:
MPC (Marginal Propensity to Consume) is the change in consumption resulting from a change in disposable income, while MPS (Marginal Propensity to Save) is the change in saving resulting from a change in disposable income. Both MPC and MPS can range from 0 to 1, indicating the proportion of additional income that is consumed or saved. Therefore, statement D is correct.
5. At the breakeven point, saving is zero:
The breakeven point is the level of income at which consumption expenditure equals disposable income. At this point, individuals are neither saving nor borrowing. However, it does not mean that saving is zero. Saving can still occur at other income levels, either positive or negative. Hence, statement E is incorrect.
In summary, the correct statement from the given options is B. The sum of APC and APS is equal to 1.
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Community Answer
Identify the correct statement from the following:A. Consumption curve...
The correct answer is C: B, D, E only. Here's an explanation for each statement:
B. The sum of APC (Average Propensity to Consume) and APS (Average Propensity to Save) is equal to 1:
B. The sum of APC (Average Propensity to Consume) and APS (Average Propensity to Save) is equal to 1:
- This is true because the total income is either consumed or saved. So, APC + APS = 1.
D. The value of MPC (Marginal Propensity to Consume) and MPS (Marginal Propensity to Save) varies between 0 and 1:
- This is true because MPC represents the proportion of an additional unit of income that is spent on consumption, and MPS represents the proportion that is saved. Since the entire additional income is either consumed or saved, the sum of MPC and MPS must be 1, and their individual values must lie between 0 and 1.
E. At the breakeven point, saving is zero:
- This is true because, at the breakeven point, total expenditure equals total income, leaving no income for saving. Thus, saving is zero at this point.
The other statements (A and C) are incorrect:
A. Consumption curve starts from the origin:
A. Consumption curve starts from the origin:
- This is false because even at zero income, there might be some consumption due to autonomous consumption, which is independent of income level.
C. Aggregate demand and market demand mean the same:
- This is false because aggregate demand refers to the total demand for all goods and services in an economy, while market demand refers to the demand for a specific good or service in the market.
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Identify the correct statement from the following:A. Consumption curve starts from the originB. The sum of APC and APS is equal to 1C. Aggregate demand and market demand mean the sameD. The value of MPC and MPS varies between 0 and 1E. At breakeven point sav ing is zeroChoose the correct answer from the options given below:a)A, D, E onlyb)B, C, D onlyc)B, D, E onlyd)A, C, E onlyCorrect answer is option 'C'. Can you explain this answer?
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