Calculate the transitory income or average propensity

Reference no: EM13196375

Assume that the average income of an artist is $40,000 per year and that C=0.75Y^P. Further assume that in a good year the artist earns $50,000 and that in a bad year she earns $30,000.

1)Calculate the artist's average propensity to consume on average, in a good year and in a bad year respectively.

2)Calculate the artist's transitory income in an average year, in a good year and in a bad year respectively

Reference no: EM13196375

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