The larger the proportion of income spent on a product, other things equal, what is indicated?
A) The consumer's demand is more inelastic.
B) The consumer's demand curve is more vertical.
C) The consumer's demand is more elastic.
D) The consumer's demand is more unit elastic.

Question

Quizplus · Accepted Answer

When a larger proportion of income is spent on a product, the consumer becomes more price-sensitive and hence, their demand becomes more elastic. This means that a change in price will have a greater impact on their willingness to purchase the product.

The Larger the Proportion of Income Spent on a Product