Question
Refer to the figure. The consumption schedule indicates that
Multiple Choice
consumers will maximize their satisfaction where the consumption schedule and 45° line intersect.
up to a point, consumption exceeds income but then falls below income.
the MPC falls as income increases.
households consume as much as they earn.
Multiple Choice
consumers will maximize their satisfaction where the consumption schedule and 45° line intersect.
up to a point, consumption exceeds income but then falls below income.
the MPC falls as income increases.
households consume as much as they earn.
Answers
GPT-4o mini
To accurately respond to your question, I would need to see the figure you're referring to. However, I can provide some general insights about consumption schedules and the 45° line.
1. **Consumers will maximize their satisfaction where the consumption schedule and 45° line intersect**: This statement is typically true. The point where the consumption schedule intersects the 45-degree line indicates that consumption equals income, and this is often where consumer satisfaction is maximized.
2. **Up to a point, consumption exceeds income but then falls below income**: This situation can happen in real-world scenarios if consumers are borrowing or using savings to finance consumption, and it may be depicted in some models. However, this isn't a standard interpretation of the consumption schedule.
3. **The MPC falls as income increases**: The marginal propensity to consume (MPC) can indeed decrease as income increases, but this isn't universally true and may depend on the specific economic context.
4. **Households consume as much as they earn**: This is reflected at the point where the consumption schedule intersects the 45-degree line, meaning consumption is equal to income at that level.
Given these insights, the option that is most likely correct (assuming the standard model of consumption) is: **"consumers will maximize their satisfaction where the consumption schedule and 45° line intersect."**
If you can provide the figure or more context, I could help you make a more precise choice.
1. **Consumers will maximize their satisfaction where the consumption schedule and 45° line intersect**: This statement is typically true. The point where the consumption schedule intersects the 45-degree line indicates that consumption equals income, and this is often where consumer satisfaction is maximized.
2. **Up to a point, consumption exceeds income but then falls below income**: This situation can happen in real-world scenarios if consumers are borrowing or using savings to finance consumption, and it may be depicted in some models. However, this isn't a standard interpretation of the consumption schedule.
3. **The MPC falls as income increases**: The marginal propensity to consume (MPC) can indeed decrease as income increases, but this isn't universally true and may depend on the specific economic context.
4. **Households consume as much as they earn**: This is reflected at the point where the consumption schedule intersects the 45-degree line, meaning consumption is equal to income at that level.
Given these insights, the option that is most likely correct (assuming the standard model of consumption) is: **"consumers will maximize their satisfaction where the consumption schedule and 45° line intersect."**
If you can provide the figure or more context, I could help you make a more precise choice.