Consider the following function:C=100+0.7YWhat is the average consumption when income is 200?Namely, the average propensity to consume
Question
Solution 1
To calculate the average consumption when income is 200, we need to substitute Y (income) with 200 in the given function C=100+0.7Y.
Step 1: Substitute Y with 200 in the function C = 100 + 0.7 * 200
Step 2: Calculate 0.7 * 200 = 140
Step 3: Add 100 to 140 C = 100 + 140 = 240
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