A given percentage rise in the price of a good is likely to result in a larger percentage decrease in the quantity of the good demanded
A)the shorter the passage of time since the price change.
B)the larger the proportion of income spent on it.
C)the more difficult it is to obtain good substitutes.
D)the lower the price.
E)all of the above.

Question

Quizplus · Accepted Answer

The larger the proportion of income spent on a good, the more sensitive consumers are to price changes, leading to a larger percentage decrease in quantity demanded when prices rise. This is because consumers feel the impact more when a significant portion of their budget is affected, prompting them to reduce consumption more significantly than they would for less costly items.

A Given Percentage Rise in the Price of a Good