Question

Distinguish between Average Propensity to Consume (ACP) and Marginal Propensity to Consume (MPC).

Answer 1

Average Propensity to Consume (ACP)	Marginal Propensity to Consume (MPC).
APC refers to the Average Propensity to Consume which defines the amount of consumption in every 1 rupee of income for all levels of income.	Marginal Propensity to consume refers to the percentage change in consumption for every one rupee of change in the income.
It is between the income and its corresponding consumption.	It is the ratio between the change in income and the corresponding change in consumption.
APC= C/Y	MPC=^C/^Y
for example ncome (Y) Consumption(C) APC= C/Y 100 80 0.8	Income (Y) Consumption(C) MPC=^C/^Y 100 80 - 200 140 0.6 300 210 0.7