Asked by Lindsay Armstrong on May 04, 2024
Verified
When disposable income is 3500,induced consumption is
A) -500.
B) 0.
C) 500.
D) 750.
E) 1000.
Induced Consumption
Refers to the portion of consumer spending that increases or decreases in response to changes in income.
Disposable Income
The pot of funds households have at their disposal for saving and spending, post-income tax.
- Understand how the availability of disposable income affects consumer expenditure.
- Discriminate between the notions of induced consumption and autonomous consumption.
Verified Answer
NM
Niquayi MassardMay 10, 2024
Final Answer :
C
Explanation :
Induced consumption is the portion of consumption that varies with disposable income. When disposable income is 3500, the induced consumption is 500. Therefore, the correct answer is option C.
Learning Objectives
- Understand how the availability of disposable income affects consumer expenditure.
- Discriminate between the notions of induced consumption and autonomous consumption.