Suppose a 10% increase in the price of steak reduces the consumption of steak by 30%. Such a price rise will induce households to spend
A) less of their income on steak.
B) more of their income on steak.
C) the same amount on steak as before.
D) more on products that are complementary with steak.

Question

Quizplus · Accepted Answer

When the price of steak increases by 10% and consumption decreases by 30%, households are likely to spend less of their income on steak because the decrease in quantity consumed more than offsets the price increase, leading to a reduction in total expenditure on steak.

Suppose a 10% Increase in the Price of Steak Reduces