10. (LO2) The marginal propensity to consume is given by MPC=0.75+(4)/(sqrt (Y)) where Y is national income. If consumption is 20 when Y=0 find the consumption when Y=25. e) 34 a) 28 b) 24 c) 36 d) 78.75

Question

Answer 1

To find the consumption when

, we need to integrate the marginal propensity to consume (MPC) function with respect to

to obtain the consumption function.Given:

The consumption function \( C(Y) \) is obtained by integrating the MPC function:

Let's integrate term by term:

The first integral is straightforward:

For the second integral, we use the power rule for integration:

So, the consumption function is:

We are given that consumption is 20 when

:

Thus, the consumption function is:

Now, we need to find the consumption when

:

Therefore, the correct answer is:d) 78.75

Soru