Graph the bens consumption function

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Reference no: EM1323012

Q. Data on before-tax income, taxes paid also consumption expenditure for the Bens family in various yrs are given below: (12points)
Before-Tax Income ($)Taxes paid ($)Consumption Expenditure ($)

25,0003,00020,000
27,0003,50021,350
28,0003,70022,070
30,0004,00023,600

a. Graph the Bens consumption function also find their households marginal propensity to consume.

b. How much would you expect the Bens to consume if their income was $32,000 also they paid taxes of $5,000? In other words, find Bens marginal propensity to consume. (Hint: a multiple-step question)

c. Ben wins a lottery prize. As a result, the Ben family increases its consumption by $1,000 at every level of after-tax income. (Income does not include the prize funds.) How does this change their consumption function? How does it involve their marginal propensity to consume?

Reference no: EM1323012

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