JAMB Economics 2015 Paper

Concept:Marginal Propensity to Consume (MPC) measures the fraction of extra income spent on consumption.Explanation:Calculate the change in income:New income $= N250$Old income $= N150$Change in income $= N250 - N150 = N100$Calculate the change in consumption:New consumption $= N150$Old consumption $= N100$Change in consumption $= N150 - N100 = N50$Use the MPC formula:$$MPC = \frac{\text{Change in consumption}}{\text{Change in income}}$$$$MPC = \frac{N50}{N100} = 0.5$$Answer:The Marginal Propensity to Consume is $0.5$, which is option D.