Answer: E) 0.75
Explanation:
Marginal Propensity to Consume measures the amount that a person spends on consumption when their income increases.
It is calculated as;
= change in consumption/ change in income
Income went from $0 to $500 so change = $500
Consumption went from $300 to $675 so change is = $375
MPC = 375/500
= 0.75
