There are only two things we can do with our income, we can either save it, or use it to consume some good. The reason MPC + MPS = 1 is because we use a fraction of the next dollar we earn for...
we do care about the marginal propensity to consume because it shows the ratio of an increase in consumption due to increase in income it does not matter what the income of the consumer,either high...
If
disposable income Yd desired consumption "C" average propensity to
consume APC=
C/Yd
--------------------------- ----------------------------- ---------------------------
o 100
100 180...
The marginal propensity to consume (MPC) is an economic concept to show the increase in personal consumer spending or consumption that occurs with an increase in disposable income. Here is the...
The average propensity to consume is the fraction of total disposable income that households spend on consumption (as opposed to saving for example) whereas marginal propensity to consume is the...