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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 by using formula 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...

Calculation of Consumption and Savings

Consumption and savings can be calculated using the given information about the marginal propensity to consume and the break-even point.

Given Data:
- Marginal Propensity to Consume (MPC) = 0.5
- Break-even point (Zero savings point) = Tsh. 8000
- Income = Tsh. 10000

Calculation:
- MPC = Change in Consumption / Change in Income
- MPC = 0.5

Consumption Calculation:
- Change in Income = Income - Break-even point
- Change in Income = 10000 - 8000 = 2000
- Change in Consumption = MPC * Change in Income
- Change in Consumption = 0.5 * 2000 = 1000
- Consumption = Break-even point + Change in Consumption
- Consumption = 8000 + 1000 = Tsh. 9000

Therefore, the amount consumed will be Tsh. 9000.

Savings Calculation:
- Savings = Income - Consumption
- Savings = 10000 - 9000 = Tsh. 1000

Therefore, the amount saved will be Tsh. 1000.

In conclusion, with a marginal propensity to consume of 0.5 and a break-even point of Tsh. 8000, if income is Tsh. 10000, then Tsh. 9000 will be consumed and Tsh. 1000 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 by using formula How much will be consumed and how much will be saved?
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