Question

Marnie earns $25,000 a year while working at a local bookstore. Because the bookstore did very well this past year, Marnie received a $500 raise. She consumes part of this additional income and saves part of it. If Marnie’s MPC = 0.75, how much money from her raise will she save?

Answer 1

Marnie will save = $ 125 from her raise .

Step-by-step explanation:

raise income = $500

MPC = = 0.75

Marnie consumer 0.75 of every dollar increase . So total consumption increase = 500 * 0.75 = 375 $

Marnie will save = 500 - 375 = $ 125 from her raise .