Since for most people, eating in restaurants is a luxury and eating at home is a necessity, the price elasticity of demand for food eaten at home is less than the price elasticity of demand for eating in restaurants.

Question

Quizplus · Accepted Answer

The price elasticity of demand for necessities like food eaten at home is typically lower (more inelastic) because people will continue to buy them despite price changes, whereas luxuries like eating in restaurants have higher elasticity as people can more easily reduce consumption when prices rise.

Since for Most People, Eating in Restaurants Is a Luxury