Economics (AS & A Level) · Oct / Nov 2024 · Paper 31 · Question 19

A consumer has an income of $1000 per week. The consumer spends 80% of this on goods and services. Following an increase in the consumer's income to $1200 per week, consumption increases to $900 per week. Which statement is correct?

1. AThe average propensity to consume does not change.
2. BThe initial average propensity to consume is 5.
3. CThe marginal propensity to consume is 0.5.
4. DThe marginal propensity to consume is 2.

As printed in the paper