Marginal Propensity to Consume

Marginal Propensity to consume (MPC) relates to a change in total consumption expenditure to a change in the total disposable income.

Symbolically,
    
MPC = ∆C/∆Y

where, ∆C = Change in total consumption expenditure and

∆Y = Change in total disposable income.

Suppose, the total disposable income in an economy increases from $ 10,000 crore to $ 20,000 crore and the consumption expenditure rises from $ 8,000 crore to $ 15,000 crore, then the MPC will be calculated as follows:

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