The disposable income of mr joseph in year 2000 was N13000 while his consumption expenditure stood at N11,500, As a result of tutorial classes in year 2012, the disposable income grows to N18,500 while his consumption expenditure also rose to N140,50.Calculate?

Question

The disposable income of mr joseph in year 2000 was N13000 while his consumption expenditure stood at N11,500, As a result of tutorial classes in year 2012, the disposable income grows to N18,500 while his consumption expenditure also rose to N140,50.Calculate?

# The MPC
# The MPS
# The APC in 2012

Answer 1

To calculate the MPC (Marginal Propensity to Consume), MPS (Marginal Propensity to Save), and APC (Average Propensity to Consume) in 2012, we need to understand the formulas for each.

1. MPC (Marginal Propensity to Consume):
MPC represents the proportion of an increase in disposable income that is spent on consumption. It can be calculated using the following formula:
MPC = Change in Consumption / Change in Disposable Income

2. MPS (Marginal Propensity to Save):
MPS represents the proportion of an increase in disposable income that is saved instead of spent on consumption. It can be calculated using the following formula:
MPS = Change in Saving / Change in Disposable Income

3. APC (Average Propensity to Consume):
APC represents the percentage of disposable income that is spent on consumption. It can be calculated using the formula:
APC = Consumption Expenditure / Disposable Income

Now, let's calculate each value using the given information about Mr. Joseph's disposable income and consumption expenditure in the two years:

Year 2000:
Disposable Income = N13,000
Consumption Expenditure = N11,500

Year 2012:
Disposable Income = N18,500
Consumption Expenditure = N14,050

To calculate the changes in consumption and saving, we subtract the values of the previous year from the values of the current year:

Change in Consumption = Consumption Expenditure (2012) - Consumption Expenditure (2000)
Change in Saving = Disposable Income (2012) - Consumption Expenditure (2012)

Let's plug in the values and calculate each parameter:

Change in Consumption = N14,050 - N11,500 = N2,550

Change in Saving = N18,500 - N14,050 = N4,450

MPC = Change in Consumption / Change in Disposable Income
MPC = N2,550 / N4,450

MPS = Change in Saving / Change in Disposable Income
MPS = N4,450 / N4,450

APC = Consumption Expenditure / Disposable Income
APC = N14,050 / N18,500

After substituting the values, you can calculate the MPC, MPS, and APC.