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Determination of Income and Employment — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsDetermination of Income and Employment3 Marks
Question
Distinguish between Average Propensity to Consume and Marginal Propensity to Consume using a numerical example.
✓

Answer

MPC is the ratio of change in consumption expenditure (∆C) to change in total income (∆Y).
Suppose ∆C = 70 and ∆Y = 100 then MPC = $\frac{70}{700}=0.7$ 
APC is the ratio of total consumption expenditure (C) to total income (Y). Suppose C = 80 and Y = 100 then APC  $=\frac{80}{100}=0.8$

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