From Wikipedia, the free encyclopedia
Consumption that varies with income
This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Induced consumption" – news · newspapers · books · scholar · JSTOR (December 2009) (Learn how and when to remove this message) |
Induced consumption is the portion of consumption that varies with disposable income.[1] When a change in disposable income “induces” a change in consumption on goods and services, then that changed consumption is called “induced consumption”. In contrast, expenditures for autonomous consumption do not vary with income. For instance, expenditure on a consumable that is considered a normal good would be considered to be induced.
In the simple linear consumption function,[2]
induced consumption is represented by the term , where denotes disposable income and is called the marginal propensity to consume.
See also
[edit]References
[edit]- ^ "The Difference Between Induced Consumption and Autonomous Consumption". Investopedia. Retrieved 2023-10-25.
- ^ Arnold, Roger A. (2015). "The Consumption Function". Economics (12th ed.). Cengage Learning. pp. 259–60. ISBN 978-1-305-46545-9.
Concepts | |
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Research types | |
Consumer attributes | |
Processes |
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