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Suppose that the marginal propensity to consume is constant 0.5 and break even point (zero saving point) is Tsh. 8000 if income is Tsh. 10000, then How much will be consumed and how much will be saved?
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Suppose that the marginal propensity to consume is constant 0.5 and br...
Solution:
Given:
- Marginal propensity to consume (MPC) = 0.5
- Break-even point (zero saving point) = Tsh. 8000
- Income = Tsh. 10000
Calculating Consumption and Savings:
- MPC is the proportion of additional income that a household spends on consumption. In this case, since MPC is 0.5, it means that 50% of any increase in income will be spent on consumption.
- Break-even point is the point where income equals consumption. In this case, at an income of Tsh. 10000 and consumption of Tsh. 8000, savings will be Tsh. 2000.
- To calculate the consumption, we can use the formula: Consumption = MPC * Income
- Substituting the values, Consumption = 0.5 * 10000 = Tsh. 5000
- Savings can be calculated as: Savings = Income - Consumption
- Substituting the values, Savings = 10000 - 5000 = Tsh. 5000
Summary:
- In this scenario, the household will consume Tsh. 5000 and save Tsh. 5000 when the income is Tsh. 10000. The break-even point is Tsh. 8000 where savings will be Tsh. 2000. The constant MPC of 0.5 indicates that half of any increase in income will be spent on consumption.
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Suppose that the marginal propensity to consume is constant 0.5 and break even point (zero saving point) is Tsh. 8000 if income is Tsh. 10000, then How much will be consumed and how much will be saved?
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Suppose that the marginal propensity to consume is constant 0.5 and break even point (zero saving point) is Tsh. 8000 if income is Tsh. 10000, then How much will be consumed and how much will be saved? for Class 10 2024 is part of Class 10 preparation. The Question and answers have been prepared according to the Class 10 exam syllabus. Information about Suppose that the marginal propensity to consume is constant 0.5 and break even point (zero saving point) is Tsh. 8000 if income is Tsh. 10000, then How much will be consumed and how much will be saved? covers all topics & solutions for Class 10 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Suppose that the marginal propensity to consume is constant 0.5 and break even point (zero saving point) is Tsh. 8000 if income is Tsh. 10000, then How much will be consumed and how much will be saved?.
Suppose that the marginal propensity to consume is constant 0.5 and break even point (zero saving point) is Tsh. 8000 if income is Tsh. 10000, then How much will be consumed and how much will be saved? for Class 10 2024 is part of Class 10 preparation. The Question and answers have been prepared according to the Class 10 exam syllabus. Information about Suppose that the marginal propensity to consume is constant 0.5 and break even point (zero saving point) is Tsh. 8000 if income is Tsh. 10000, then How much will be consumed and how much will be saved? covers all topics & solutions for Class 10 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Suppose that the marginal propensity to consume is constant 0.5 and break even point (zero saving point) is Tsh. 8000 if income is Tsh. 10000, then How much will be consumed and how much will be saved?.
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