The consumption function of an economy is given as C = 60 + 6Y. Calculate the break- even level of income.
But, MPC can not be equal to 6 as we know that the value of MPC always lies between 0 and 1. So, let's take MPC = 0.6.
Now, we know, at break even level of income:
C = Y
60 + 0.6 Y = Y
60 =1 Y - 0.6 Y
0.4 Y = 60
Y = 150
Thus, break even level of income is Rs 150.
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