Assertion (A): With a consumption function C = c̄ + bY and c̄ > 0, the APC falls as income rises.
Reason (R): APC = c̄ ÷ Y + b, and c̄ ÷ Y gets smaller as Y grows.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

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CorrectNot quiteAnswer A

Correct answer: A

Dividing C by Y gives APC = c̄ ÷ Y + b, which approaches b from above.
R explains A.

Concept: Falling APC
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsAPC, MPC, APS and MPS

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Assertion (A): With a consumption function C = c̄ + bY and c̄ > 0, the APC falls as income rises.Reason (R): APC = c̄ ÷ Y + b, and c̄ ÷ Y gets smaller as Y grows.

Explanation

Assertion (A): With a consumption function C = c̄ + bY and c̄ > 0, the APC falls as income rises.
Reason (R): APC = c̄ ÷ Y + b, and c̄ ÷ Y gets smaller as Y grows.