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What is avera...

Question

What is average propensity to consume? How is it calculated?

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Solution

APC refers to Average Propensity to Consume which defines the amount of consumption in every one rupee of income for all levels of income. It is the ratio between the consumption and income in the economy at a given point of time.
Average propensity to consume= Consumption/ Income.

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Q. Define 'average propensity to consume' and 'marginal propensity to consume'. How are they calculated?

Q. Give the meaning of average propensity to save. What is its relation with average propensity to consume?

Q. Sum of average propensity to consume and marginal propensity to consume is always equal to 1.
True/False.

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Can the sum of average propensity to consume be greater than 1? Give reasons for your answer.

Distinguish between Average Propensity to Consume and Marginal Propensity to Consume.

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