If people spend a large percentage of their income on a particular product,which of the following statements is true?
A)The product has a large number of substitutes.
B)The price elasticity of demand for the product is high.
C)The income elasticity of demand for the product is low.
D)The elasticity of supply for the product is low.

Question

Quizplus · Accepted Answer

If people spend a large percentage of their income on a particular product, it indicates that the product is a significant portion of their budget or income. As a result, they are more likely to be responsive to changes in price, making the price elasticity of demand for the product high. This implies that small changes in price will lead to significant changes in the quantity demanded.

If People Spend a Large Percentage of Their Income on a Particular