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    Northwest Florida State College
    Jun-1992 - May-1997

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    Northwest Florida State College,
    Aug-2006 - Nov-2015

Category > Economics Posted 05 May 2017 My Price 9.00

In the linear consumption function

    1. In the linear consumption function

co ˆ ns = � ˆ

0

+ � ˆ inc ,

the (estimated) marginal propensity to consume (MPC) out of income is simply the slope, � ˆ , while the average propensity to consume (APC) is co ˆns / inc = � ˆ / inc + � ˆ .

1

1 0 1

Using observations for 100 families on annual income and consumption (both measured

in dollars), the following equation is obtained:

c o ˆ ns = -124.84 + 0.853 inc

n = 100, R 2 = 0.692

      1. Interpret the intercept in this equation and comment on its sign and magnitude.

      2. What is predicted consumption when family income is $30,000?

      3. With inc on the x -axis, draw a graph of the estimated MPC and APC.

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Status NEW Posted 05 May 2017 01:05 PM My Price 9.00

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