C = 0.01y^2 + 0.4y + 100. Calculate the marginal propensity to save when
a) y = 25
b) y = 10
To calculate the marginal propensity to save, we need to find the derivative of the consumption function C with respect to y.
Given the consumption function C = 0.01y^2 + 0.4y + 100, let's find the derivative:
dC/dy = 0.02y + 0.4
a) When y = 25:
dC/dy = 0.02(25) + 0.4 = 0.5 + 0.4 = 0.9
Therefore, the marginal propensity to save when y = 25 is 0.9.
b) When y = 10:
dC/dy = 0.02(10) + 0.4 = 0.2 + 0.4 = 0.6
Therefore, the marginal propensity to save when y = 10 is 0.6.