Assume that the average income of an artist is $40,000 per year and that C=0.75Y^P. Further assume that in a good year the artist earns $50,000 and that in a bad year she earns $30,000.
1)Calculate the artist's average propensity to consume on average, in a good year and in a bad year respectively.
2)Calculate the artist's transitory income in an average year, in a good year and in a bad year respectively