When Julie Anns disposable income is 10000 she spends 10000

When Julie Ann\'s disposable income is $10,000, she spends $10,000 and when her disposable income is $15,000, her spending is $12,500. Julie Ann\'s autonomous consumption is ________ and her ___________.

$5,000; MPC = 0.50

$10,000; MPS = 0.50

$0; MPC = 0.50

$0; MPS = 0.50

$5,000; MPC = 1.

Solution

Answer:- Option (a) $5,000; MPC = 0.50

Explanation:-

Disposable

income(Y)

Consumption

expenditure(C)

Marginal

propensity to

consume (MPC)

Marginal

propensity to

save(MPS)

Marginal propensity to consume(MPC) = Change in consumption expenditure / Change in sisposable income.

=(12500 - 10000) / (15000-10000)

=2500 / 5000

= 0.50

Marginal propensity to save(MPS) = 1- Marginal propensity to consume (MPC).

=1 - 0.50

= 0.50

Autonomous consumer spending (A) = Consumption expenditure (C) - MPC * Disposable income (Y).

=10000 - 0.50*10000

=10000 - 5000

= $ 5000

Conclusion:- Option (A)