Question
Differentiate between APC and MPC.
|
S.No.
|
APC
|
Basis
|
MPC
|
|
1.
|
It is the ratio of consumption expenditure to the corresponding level of income (Y) at a point of time.
|
Meaning
|
It is the ratio of change in consumtion expenditure $(\Delta\text{C)}$ to change in income $(\Delta\text{Y)}$ over a period of time.
|
|
2.
|
APS can be more than one as long as consumption is more than national incomem, i.e., till the break-even point.
|
Value more than one
|
MPC cannot be more than one as change in consumption cannot be more than change in income.
|
|
3.
|
When income increases APC fails but at a rate of less than that of MPC.
|
Response to change in income
|
When income increases MPC also falls but at a rate of more than that of APC.
|
|
4.
|
$\text{APC}=\frac{\text{C}}{\text{Y}}$
|
Formula
|
$\text{MPC}=\frac{\Delta\text{C}}{\Delta\text{Y}}$ |
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.
|
S. No.
|
|
$(₹$ in lakhs$)$
|
| $(i)$ |
Purchase of machinery to be used in the production unit.
|
$100$ |
| $(ii)$ |
Sales.
|
$200$ |
| $(iii)$ |
Intermediate costs.
|
$90$ |
| $(iv)$ |
Indirect taxes.
|
$12$ |
| $(v)$ |
Change in stock.
|
$10$ |
| $(vi)$ |
Excise duty.
|
$6$ |
| $(vii)$ |
Stock of raw material.
|
$5$ |