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Model Paper 2 — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsModel Paper 24 Marks
Question
Explain the concept of consumption function.
✓

Answer

i. Consumption function shows the relation between consumption and income.
ii. Consumption function is expressed in the following two ways:
iii, $C = f( Y )$ Where, $C =$ Consumption, $Y =$ Income; Or
iv. $C = a + bY$ Where, $a =$ Autonomous Consumption, $b =$ Propensity to Consume

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