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Determination of Income and Employment — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsDetermination of Income and Employment3 Marks
Question
Can the value of APC be greater than unity? If yes, when?
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Answer

Yes, the value of APC can be greater than unity. It is so possible when the level of income is very low and consumption expenditure cannot fall below a minimum level. e.g., suppose the income level ₹ 200 and the minimum level of consumption is ₹ 240, the value of:$\text{APC}=\frac{\text{C}}{\text{Y}}=\frac{240}{200}=1.2.$

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