Harry is looking at buying a building that has a monthly income of $3,600, a 5% vacancy rate, and annual expenses of $8,640. he

Answer:The marginal propensity to consume (MPC) is 0.65

The multiplier or k = 2.85714 rounded to 2.86

Explanation:

The MPC pertains to the fraction of additional disposable income that consumers choose to spend. It is used to gauge the consumption increase driven by rising income.

MPC can be calculated as follows,

MPC = Change in consumption / change in income

MPC = 0.65 / 1

MPC = 0.65

To derive the multiplier, we apply this formula,

Multiplier or k = 1 / (1 - MPC)

k = 1 / (1 - 0.65)

k = 2.85714 rounded to 2.86

The accurate answer is $33,000. The details of the scenario allow us to compute the provided information as follows: If the company purchases the CDs from external sources, only the Fixed Overhead can be avoided while all others remain unchanged. Therefore, the external price can be derived using this formula: Maximum external price = Direct Materials + Direct Labor + Variable Overhead + Fixed Overhead. Plugging in the figures, we find Maximum external price = $11,000 + $15,000 + $3,000 + $4,000 = $33,000.