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Autonomous consumption is done either through past savings or by borrowing money or selling asset to have minimum consumption in order to survive.

So can autonomous consumption be greater than our 1st level of consumption ?

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  • $\begingroup$ What is "1st level of consumption"? $\endgroup$ – Alecos Papadopoulos Nov 16 '18 at 17:38
  • $\begingroup$ @AlecosPapadopoulos In the schedule that we make of Income and Consumption . In which at level of zero income , we consume some amount (autonomous consumption) . But afterwards at when our income increases i.e from zero to something , we increase our consumption . The level in which our income has increased from zero to something is what I am referring to as First level of Income . Apologies if I used the wrong term for it . $\endgroup$ – JIM Nov 17 '18 at 1:26
  • $\begingroup$ Indeed, there is not such term used in the literature. $\endgroup$ – Alecos Papadopoulos Nov 17 '18 at 2:05
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    $\begingroup$ @AlecosPapadopoulos I'm Still in high school and studying AD just now for first time . So I don't know much about the terms . $\endgroup$ – JIM Nov 17 '18 at 2:45
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Expressing consumption as

$$C = a + f(Y)$$

where $Y$ is income, there is nothing in the theory that forbids

$$a > f(Y)$$

even though the theoretical anticipation and the empirical regularity (i.e. for most people) is that $a < f(Y)$.

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  • $\begingroup$ What you said can not be true for all Y for all types of f(Y). $\endgroup$ – erik Nov 17 '18 at 2:45
  • $\begingroup$ @AlecosPapadopoulos Generally Autonomous consumption is lesser then income but it can be more than income ? $\endgroup$ – JIM Nov 17 '18 at 2:47
  • $\begingroup$ @erik Maybe not, but the question here is whether it can be higher, not whether it is always higher. $\endgroup$ – Alecos Papadopoulos Nov 17 '18 at 3:30
  • $\begingroup$ @JIM In theory yes. But even in theoretical models it is usually considered to be less. $\endgroup$ – Alecos Papadopoulos Nov 17 '18 at 3:31
  • $\begingroup$ @AlecosPapadopoulos I know. Just pointing out that the general nature of f in your answer might make a casual reader think that this is always true for all f. I agree with your argument that the the question only asks for ‘can’. $\endgroup$ – erik Nov 18 '18 at 4:06
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econ 101 , assume people are rational.
imagine you are an irrational person who lives in an unreasonably poor 3rd world country where you mine diamonds for a living , you are paid a dollar(1.00),for your troubles but the cost of water and food a day cost a dollar 25 (1.25). then yes autonomous consumption can be greater than income.

but, assuming youre rational you'd realize the reward of working (income) is less than the cost to feed yourself(autonomous consumption), and will decide to be unemployed instead because thats the rational thing to do.

in summary all things being equal autonomous consumption "cannot" be greater than income .

keyword phrase = "all things being equal"

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