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#economics
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#consumption
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#saving
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#graphing
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Draw a straight line consumption curve .from it derive a saving curve explaining the process.show on the diagram the level of income at which average propensity to consume equal to one?

Mar 3

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Mar 3

To draw a straight line consumption curve, we can start by plotting a horizontal line at a certain level of consumption. This line represents the level of consumption that remains constant regardless of changes in income.

Next, to derive a saving curve, we can plot a diagonal line starting from the origin and intersecting the consumption curve at various points. The distance between the consumption curve and the saving curve at each point represents the level of saving at that particular income level.

The level of income at which the average propensity to consume is equal to one is when the consumption curve intersects the 45-degree line (which represents a one-to-one relationship between income and consumption). This point indicates that all income is being consumed and none is being saved.

Overall, the consumption curve will be a straight line, while the saving curve will be a diagonal line intersecting the consumption curve at various points to show the level of saving at different income levels. The point where the consumption curve intersects the 45-degree line represents the level of income at which the average propensity to consume is equal to one.

Next, to derive a saving curve, we can plot a diagonal line starting from the origin and intersecting the consumption curve at various points. The distance between the consumption curve and the saving curve at each point represents the level of saving at that particular income level.

The level of income at which the average propensity to consume is equal to one is when the consumption curve intersects the 45-degree line (which represents a one-to-one relationship between income and consumption). This point indicates that all income is being consumed and none is being saved.

Overall, the consumption curve will be a straight line, while the saving curve will be a diagonal line intersecting the consumption curve at various points to show the level of saving at different income levels. The point where the consumption curve intersects the 45-degree line represents the level of income at which the average propensity to consume is equal to one.