Question

Define or Explain the following concept:

Autonomous Consumption

Answer 1

Autonomous consumption: Autonomous consumption refers to the consumption that is independent of income. In other words, expenditure on such consumption is undertaken irrespective of the level of income. It includes consumption of such items as food, clothing, shelter, etc. Such an expenditure cannot fall to zero. This part of consumption expenditure is symbolically denoted by `barC`. The bar over C represents the constant consumption expenditure. In other words, it remains the same irrespective of the level of income.