Answer:
The MPC is 0.6
Explanation:
Marginal propensity to consume (MPC): It means that if consumer spending increases than its income also increase which shows a direct relationship.
The formula to compute the MPC is shown below:
= Change in the consumption ÷ change in income
where,
Change in the consumption equals to
= Total consumption - autonomous consumption
= $800 - $200
= $600
And, the disposable income is $1,000
Now put these values to the above formula
So, the answer would be equal to
= $600 ÷ $1,000
= 0.6
