MPC being equal to 0 5 what will be if income increases by Rs 100 ........

MPC being equal to 0.5, what will be , if income increases by Rs.100?

Rs. 60

Rs. 50

Rs. 40

Rs. 70

- MPC stands for Marginal Propensity to Consume. It's a measure in economics that shows the change in consumption resulting from a change in income.

- If MPC = 0.5, it means 50% of any additional income will be spent on consumption.

- So, when income increases by Rs. 100:

- Consumption increases by 0.5 * 100 = Rs. 50.

- Let's examine the options:

- Option 1: Rs. 60 – This would mean MPC is 0.6, not correct here.

- Option 2: Rs. 50 – Matches the calculation; consumption is Rs. 50 with MPC 0.5.

- Option 3: Rs. 40 – This would imply an MPC of 0.4.

- Option 4: Rs. 70 – This would imply an MPC of 0.7.

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