The larger the proportion of a consumer's budget that is spent on a product, the more the consumer will demand a substitute.

Question

The larger the proportion of a consumer's budget that is spent on a product, the more the consumer will demand a substitute.​

Quizplus · Accepted Answer

This statement reflects the law of demand, which states that as the price of a good increases, the quantity demanded decreases. If a product's price is a large proportion of a consumer's budget, a small increase in price will have a significant impact on the consumer's purchasing power, leading them to seek alternative products at a lower price.

The Larger the Proportion of a Consumer's Budget That Is