Consumption
function depends on income. It is directly related to the level of income. It
increases as income increases. However, there is always some minimum level of C
(consumption) irrespective of level of Y. Also, increase in C tends to lag
behind the increase in Y. Because, after certain level of Y is reached, people
start saving a part of Y. As shown below:
Y(Rs)
|
C (Rs)
|
0
20
40
60
80
100
120
|
30
35
40
45
50
55
60
|
The above table
shows:
1)
30 is the minimum level of C even when Y = 0. Survival requires that C be at
least 30 even with zero income. The level of consumption at zero level of
income is called autonomous consumption.
