What is the marginal propensity to consume if: a. Consumption increases by \(\$ 75\) when disposable income rises by \(\$ 100\) ? b. Consumption falls by \(\$ 50\) when disposable income falls by \(\$ 100\) ? c. Saving equals \(\$ 20\) when disposable income equals \(\$ 100\) and saving equals \(\$ 40\) when disposable income equals \(\$ 300\) ?

To find the MPC in case a, divide the change in consumption (\(75) by the change in disposable income (\)100): MPC = \(\frac{\Delta C}{\Delta Y}\) = \(\frac{75}{100}\) = 0.75

To find the MPC in case b, divide the change in consumption (-\(50) by the change in disposable income (-\)100): MPC = \(\frac{\Delta C}{\Delta Y}\) = \(\frac{-50}{-100}\) = 0.5

To find the MPC in case c, we first need to find the change in consumption, which we can do by finding the change in saving and using the fact that the sum of consumption and saving equals disposable income. Step 1: Calculate the change in saving and the change in disposable income. \(\Delta S = 40 - 20 = 20\); \(\Delta Y = 300 - 100 = 200\). Step 2: Find the change in consumption. Since the sum of consumption and saving equals disposable income, the change in consumption and the change in saving must together equal the change in disposable income: \(\Delta C + \Delta S = \Delta Y\). So, we can find the change in consumption as follows: \(\Delta C = \Delta Y - \Delta S = 200 - 20 = 180\). Step 3: Calculate the MPC. MPC = \(\frac{\Delta C}{\Delta Y}\) = \(\frac{180}{200}\) = 0.9