1. Suppose the economy consists of three people: Angelina, Felicia, and Marina. The table shows how their...
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1. Suppose the economy consists of three people:
Angelina, Felicia, and Marina. The table shows how their consumer spending varies as their current disposable income rises by $10,000.
Current disposable income Consumer spending Angelina Felicia Marina
$0 $8,000 $6,500 $7,250 10,000 12,000 14,500 14,250
a. Derive each individual’s consumption function, where MPC is calculated for a $10,000 change in current disposable income.
b. Derive the aggregate consumption function.
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