Question: Try using this equation to derive the figures in Table 17.1. First of all try constructing a table like Table 17.1 and then graph the

Try using this equation to derive the figures in Table 17.1.

First of all try constructing a table like Table 17.1 and then graph the consumption function that it gives. What is it about equation (3) that gives the graph its particular shape?

1. What are the values of mpc at incomes of (a) 200 and (b) 1000?

2. What happens to the value of mpc as national income increases? Is this what you would expect by examining the shape of the consumption function?

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