When disposable income is 2500,induced consumption is

A) -500.
B) 0.
C) 500.
D) 1000.
E) 2500.

Question

When disposable income is 2500,induced consumption isA) -500.B) 0.C) 500.D) 1000.E) 2500.

Margaret Diyaolu · Accepted Answer

Final Answer : C, Explanation :  Induced consumption refers to the portion of consumption that changes in response to a change in disposable income. If disposable income is 2500, and assuming a positive relationship between disposable income and consumption (as is typical in economic models), a value of 500 for induced consumption suggests an increase in consumption due to the increase in disposable income, which is a plausible scenario. Negative values or values equal to the total disposable income are less typical for representing induced consumption alone.

When disposable income is 2500,induced consumption is

A) -500.
B) 0.
C) 500.
D) 1000.
E) 2500.

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