Average propensity to consume measures the ratio of total consumption to total income. It indicates the proportion of income being spent upon consumer goods and services A higher average propensity to consume would imply that a greater portion of income is being used for consumption , while a lower average propensity to consume indicates that only a small proportion of income is being devoted to consumption.
The average propensity to consume is found out by dividing the total consumption expenditure by the given level of income. In other words,
APC = C/Y
where,
APC = Average Propensity to Consume
C = Consumption Expenditure
Y = Income
