The income effect of a price change is likely to be the greatest for _____

Question

Quizplus · Accepted Answer

The income effect of a price change is likely to be the greatest for goods that constitute a significant portion of an individual's budget. Gasoline, for many people, represents a substantial part of their monthly expenses, especially for those who commute long distances or whose work involves transportation. Changes in the price of gasoline can significantly affect their disposable income and spending behavior, more so than changes in the price of items that make up a smaller portion of their budget, like chocolates or vitamin capsules.

The Income Effect of a Price Change Is Likely to Be