Page 2 - Home Assignment- AD and related concepts
P. 2
Answer: -
∆
National Consumption(C) APC= ∆ ∆ MPC=
income (Y) ∆
5000 3000 3000 - - -
= 0.6
5000
8000 5000 5000 2000 3000 3000
= 0.625 = 0.6
8000 5000
Breakeven level of National Income: -
The breakeven level of national income is determined at the point where
national income= consumption expenditure, where savings = 0.
National Income(Y) Consumption (c)
0 100
100 150
200 200
300 250
400 300
500 350
Chart Title
600
500
400
300
200
100
0
0 100 200 300 400 500 600
Series1 Series2 Linear (Series1) Linear (Series2)
i. At the break-even point APC=1.
ii. To the left-hand side of BEP, APC ˃ 1
iii. To the right-hand side of BEP, APC ˂ 1
