Explain the difference between the marginal propensity to consume Essay

Explain the difference between the marginal propensity to consume (MPC) and the average propensity to consume (APC) and show how one helps to explain the size o - Essay ExampleFor xmpl, if houshold rns on xtr dollr of disposbl incom, nd th mrginl propnsity to consum is 0.65, thn of tht dollr, th fmily will spnd 65 cnts nd sv 35 cnts. Mthmticlly, th mrginl propnsity to consum (MPC) function is xprssd s th drivtiv of th consumption (C) function with rspct to disposbl incom (Y). It is clcultd s th chng in consumption xpnditur, DC, dividd by th chng in disposbl incom, DYD, tht brought it bout.In othr words, th mrginl propnsity to consum is msurd s th rtio of th chng in consumption to th chng in incom, thus giving us figur btwn 0 nd 1. Th MPC cn b mor thn on if th subjct borrowd mony to finnc xpnditurs highr thn thir incom. On minus th MPC quls th mrginl propnsity to sv. It is ffctd by fctors such(prenominal) s th prviling intrst rt nd th gnrl lvl of consumr surplus tht cn b drivd from purchsing.1Totling, conomists oftn spk of th mrginl propnsity to sv (MPS), which is th frction of xtr incom tht popl sv. Givn tht popl ithr sv or consum dditionl incom, th sum of th mrginl propnsity to sv nd th mrginl propnsity to consum should qul on. Th vlu of th mrginl propnsity to consum should b grtr thn zro nd lss thn on. vlu of zro would indict tht non of dditionl incom would b spnt ll would b svd. vlu grtr thn on would mn tht if incom incrsd by $1.00, consumption would go up by mor thn dollr, which would b unusul bhvior. For som popl MPC of 1 is rsonbl, mning tht thy spnd vry dditionl dollr thy gt, but