Edexcel A Level Economics: Chapter 24 - Consumptio
Edexcel A Level Economics: Chapter 24 - Consumptio
Edexcel A Level Economics: Chapter 24 - Consumptio
Exam (elaborations)
Edexcel A Level Economics: Chapter 24 - Consumption Detailed Questions And Answers
6 views 0 purchase
Course
Edexcel A Level Economics: Chapter 24 - Consumptio
Institution
Edexcel A Level Economics: Chapter 24 - Consumptio
Edexcel A Level Economics: Chapter 24 - Consumption
What is consumption? - Answer-Consumption = spending on goods and services over a period of time
What are durable goods? - Answer-Durable goods: Goods which although are bought at a point of time, continue to help the consumer individual (pr...
what is the most important determinant of consumpt
what is the definition of the
Written for
Edexcel A Level Economics: Chapter 24 - Consumptio
Edexcel A Level Economics: Chapter 24 - Consumptio
Edexcel A Level Economics: Chapter 24 - Consumptio
All documents for this subject (1)
Seller
Follow
Gurustudy
Reviews received
Content preview
Edexcel A Level Economics: Chapter 24
- Consumption
What is consumption? - Answer-Consumption = spending on goods and services over a period
of time
What are durable goods? - Answer-Durable goods: Goods which although are bought at a point
of time, continue to help the consumer individual (provide services for the consumer for a
sustained period of time.
What are non durable goods? - Answer-Non-durable goods: goods and services which are used
up immediately over a period of time (e.g. sanitary products such as soap etc)
What is the most important determinant of consumption? - Answer-The most important
determinant of consumption = disposable income
What is the definition of the marginal propensity to consume? - Answer-The change in
consumption when there is a change in income is measured by the marginal propensity to
consume.
What is the equation for MPC? - Answer-MPC = Change in consumption/Change in income
What is the MPC likely to be for an entire economy? - Answer-For the entire economy as a
whole, the marginal propensity to consume is likely to be positive but less than 1 since any rise
in income will lead to an increase in spending but also an increase in saving.
How can the marginal propensity to consume be greater than 1 for some? - Answer-For
individuals, the marginal propensity to consume could be more than 1 if money were borrowed
to finance spending higher than income.
What is the average propensity to consume? - Answer-The average propensity to consume
measures the average amount spent on consumption out of total income in an economy.
For example, if total disposable income in an economy was £100 billion and consumption was
£90 billion, then average propensity to consume would be 0.9.
MPC = Consumption/Income = C/Y
In a developed country, what is the APC likely to be? - Answer-- In a rich developed economy,
APC is likely to be less than 1 since people are more likely to save a fraction of their earnings
What is the Keynesian theory of consumption? - Answer-This theory states that income is the
most important determinant of consumption.
This theory and Keynesians in general suggest that as incomes rise, households would save a
larger proportion of their income than poorer households.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Gurustudy. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.59. You're not tied to anything after your purchase.
