Prof. Tarun Das, IILMEEP Session-53
1.1 Consumption Function
Consumption function shows therelationship between consumption (C)and income (Y) at different levels of income.C = f(Y) =
is minimum level of consumption for biological survival.
Average Propensity to Consume(APC)
is the average consumptionexpenditure per unit income. APC is theratio of total consumption to income.
Marginal propensity to consume(MPC)
is the rate of change of consumption with respect to income.