The income effect will play a greater role in a consumer's spending if the good:
A)accounts for a substantial share of the consumer's spending.
B)accounts for a small share of the consumer's spending.
C)is not subject to a budget constraint.
D)is not something the consumer needs.

Question

Quizplus · Accepted Answer

The income effect will be larger if the good accounts for a substantial share of the consumer's spending because a change in price will have a greater impact on their overall disposable income.

The Income Effect Will Play a Greater Role in a Consumer's