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Question
Define marginal propensity to consume
Solution
Marginal Propensity to Consume (MPC) is the ratio of change in consumption (ΔC) to change in income (ΔY) i.e.`MPC=(DeltaC)/(DeltaY)`
Example:
`DeltaY=Rs500`
`DeltaC=Rs100`
`MPC=c=(DeltaC)/(DeltaY)`
`=100/500=0.2`
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