Marginal Propensity to Consume
Marginal Propensity to consume (MPC) relates to a change in total consumption expenditure to a change in the total disposable income.
Symbolically,
MPC = ∆C/∆Y
where, ∆C = Change in total consumption expenditure and
∆Y = Change in total disposable income.
Suppose, the total disposable income in an economy increases from $ 10,000 crore to $ 20,000 crore and the consumption expenditure rises from $ 8,000 crore to $ 15,000 crore, then the MPC will be calculated as follows:
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