\begin{tabular}{cc}
\hline Consumption & Disposable Income \\
\hline [tex]$\$[/tex] 1,200[tex]$ & $[/tex]\[tex]$ 3,000$[/tex] \\
2,100 & 4,000 \\
3,000 & 5,000 \\
\hline
\end{tabular}

Given the consumption schedule in the table above, the marginal propensity to consume is:

A. 0.1

B. 0.3

C. 0.6

D. 0.9



Answer :

Let's solve this step-by-step using the given data from the table:

1. Identify the changes in consumption:
- The initial consumption (based on the first row) is \[tex]$1,200. - The final consumption (based on the third row) is \$[/tex]3,000.
- The change in consumption ([tex]\(\Delta C\)[/tex]) is calculated as the final consumption minus the initial consumption:
[tex]\[ \Delta C = \$3,000 - \$1,200 = \$1,800 \][/tex]

2. Identify the changes in disposable income:
- The initial disposable income (based on the first row) is \[tex]$3,000. - The final disposable income (based on the third row) is \$[/tex]5,000.
- The change in disposable income ([tex]\(\Delta Y\)[/tex]) is calculated as the final disposable income minus the initial disposable income:
[tex]\[ \Delta Y = \$5,000 - \$3,000 = \$2,000 \][/tex]

3. Calculate the marginal propensity to consume (MPC):
- The Marginal Propensity to Consume (MPC) is the ratio of the change in consumption to the change in disposable income:
[tex]\[ \text{MPC} = \frac{\Delta C}{\Delta Y} = \frac{\$1,800}{\$2,000} = 0.9 \][/tex]

Thus, based on the calculations, the Marginal Propensity to Consume (MPC) is [tex]\(0.9\)[/tex]. Therefore, the correct answer is:

D. 0.9