BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -The formula for average propensity to consume is as follows: Average Propensity to Consume = Consumption/Total Disposable Income. Thus, abbreviated as APC = C / DI.

Detailed explanation-2: -APC is the ratio of consumption to income. It is the proportion of income that is consumed. It is worked out by dividing total consumption expenditure (C) by total income (Y). MPC measures the response of consumption spending to a change in income.

Detailed explanation-3: -The average propensity to consume (APC) is the ratio of consumption expenditures (C) to disposable income (DI), or APC = C / DI.

Detailed explanation-4: -Average propensity to consume (APC) measures the percentage of income that is spent rather than saved.

Detailed explanation-5: -The sum of the Average Propensity to Consume (APC) and Average Propensity to save (APS) is always equal to unity, i.e., APC + APS = 1. It is so because the money income can either be spent on consumption or it can be saved.