Definition – What is the average propensity to consume?
APC is the ratio of consumption to total income. It is the percentage of total income that is put into consumption (as opposed to savings).
Formula – How to calculate APC
Average Propensity to Consume = Consumption ÷ Total Income
Consumption is $100,000 and total income is $600,000.
APC = $100,000 ÷ $600,000 = 0.167
Therefore, the average propensity to consume is 0.167.
Sources and more resources
- Wikipedia – Average Propensity to Consume – A summary of the average propensity to consume including the formula.
- Investopedia – Average Propensity to Consume – An explanation of APC as well as a description of marginal propensity to consume.
- XplainD – Average Propensity to Consume – A quick summary and formula for APC.
- Economics Alex (YouTube) – Marginal and Average Propensity to Consume – An explanation video on average propensity to consume.