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JAMB Economics 1993 Question 19

Question 19

National Income

In the diagram above, the marginal propensity to consume (MPC) is equal to

Diagram for this question
  1. A.RP/TP
  2. B.TP/RP
  3. C.RT/RP
  4. D.RT/TP
Show the answer and explanation

Answer: B (TP/RP)

Explanation

MPC = change in consumption ÷ change in income. On the triangle, the rise TP is the change in consumption and RP the change in income, so MPC = TP/RP.