00:01
Okay, so i see that you need help with this question, and it says the accompanying table presents a hypothetical data on the aggregate consumption expenditure in disposable income and millions of dollars for five years.
00:11
What is the marginal propensity to consume? that's the mpc.
00:16
So the marginal propensity to consume is the change in the consumption expenditure divided by.
00:22
So you're going to do the change.
00:29
So i'm sorry about that interruption.
00:32
So it is the change in consumption divided by the change in disposable income.
00:46
Disposable income.
00:49
Okay, so to calculate it, we need to find the change in consumption expenditure and the change in disposable income.
00:56
In 2014, the disposable income increased from $200 million to $225 million.
01:05
In the aggregate consumption expenditure increase from 175 to 193.
01:10
So this is increase of 25, then increase, so 280 minus 225 minus 225, and so that's 55, and then 325 minus 280, that's 45, and then this is going down 25 and so 193 .75 minus 175 that's 1875 235 minus 193 .75 that's that's 41 .25.
01:56
That's 268 .75 minus 235.
02:03
That's 33 .75.
02:07
And then 250 minus 268 .75.
02:13
That's negative 18 .75.
02:18
Okay.
02:19
Okay, so then what we have to do is you're going to take your change in consumption divided by your change in income.
02:34
So that's 18 .75 divided by 25.
02:41
That is 0 .75.
02:46
Okay, therefore the marginal propensity to consume is 0 .75.
02:53
All right.
02:53
And then you could also do 41 .25 divided by 55...