Average propensity to consume (APC) is the percentage of income spent. To find the percentage of income spent, one needs to divide consumption by income, or .
Sometimes, disposable income is used as the denominator instead, so ,
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- where C is the amount spent, Y is pre-tax income, and T is taxes.
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The inverse is the average propensity to save (APS).
Average propensity to consume (APC) is the percentage of income people desire to spend.
It is key to note that Average Propensity to Consume (APC) is very different from Marginal propensity to consume (MPC). These two values are often confused.
Famous quotes containing the words average, propensity and/or consume:
“The idea that leisure is of value in itself is only conditionally true.... The average man simply spends his leisure as a dog spends it. His recreations are all puerile, and the time supposed to benefit him really only stupefies him.”
—H.L. (Henry Lewis)
“The propensity to truck, barter and exchange one thing for another ... is common to all men, and to be found in no other race of animals.”
—Adam Smith (17231790)
“We have no more right to consume happiness without producing it than to consume wealth without producing it.”
—George Bernard Shaw (18561950)