MPC Calculator

Formula

The formula to calculate the Marginal Propensity to Consume (MPC) is:

\[ MPC = \frac{CC}{CI} \]

Where:

$ MPC $ is the Marginal Propensity to Consume
$ CC $ is the Change in Consumption ($)
$ CI $ is the Change in Income ($)

What is MPC?

MPC stands for marginal propensity to consume. This is a term that refers to the increase in consumption or spending when an increase in income occurs. Understanding MPC can help determine the necessary lifestyle changes that are unnecessary when receiving an increase in income.

Example Calculation

Let's assume the following values:

Change in Consumption (CC) = $500
Change in Income (CI) = $1000

Using the formula to calculate the Marginal Propensity to Consume:

\[ MPC = \frac{500}{1000} = 0.5 \]

The Marginal Propensity to Consume is 0.5.