Question:medium
Complete the following table. Construct/Express the Consumption function at ₹ 200 crore level of income.
\[
\begin{array}{|c|c|c|c|}
\hline
\textbf{Income (Y)} & \textbf{Savings (S)} & \textbf{Average Propensity to Consume (APC)} & \textbf{Marginal Propensity to Save (MPS)} \\
\hline
0 & -30 & 1 & 0.2 \\
100 & 20 & 0.85 & 0.2 \\
200 & 70 & 0.85 & 0.2 \\
300 & 120 & 0.8 & 0.2 \\
\hline
\end{array}
\]
Complete the following table. Construct/Express the Consumption function at ₹ 200 crore level of income.
\[
\begin{array}{|c|c|c|c|}
\hline
\textbf{Income (Y)} & \textbf{Savings (S)} & \textbf{Average Propensity to Consume (APC)} & \textbf{Marginal Propensity to Save (MPS)} \\
\hline
0 & -30 & 1 & 0.2 \\
100 & 20 & 0.85 & 0.2 \\
200 & 70 & 0.85 & 0.2 \\
300 & 120 & 0.8 & 0.2 \\
\hline
\end{array}
\]
Show Hint
Use savings and income data to compute consumption, APC, and MPS accurately.
Updated On: Mar 15, 2026
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Solution and Explanation
The consumption function is determined by the equation:
\[
C = Y - S
\]
When \( Y = 200 \), the consumption is calculated as:
\[
C = 200 - 70 = 130
\]
The Average Propensity to Consume (APC) is computed using:
\[
APC = \frac{C}{Y}
\]
For \( Y = 200 \), the APC is:
\[
APC = \frac{130}{200} = 0.85
\]
The Marginal Propensity to Save (MPS) is a constant value, calculated as:
\[
MPS = 1 - MPC
\]
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