Since the income elasticity for food is estimated to be 0.51, it appears that the proportion of income spent by poor people on food is ____ the proportion spent by those with higher incomes.
A) greater than
B) less than
C) about the same as
D) about half as great as

Question

Quizplus · Accepted Answer

The income elasticity of 0.51 indicates that food is a necessity, meaning that as income increases, the proportion of income spent on food decreases. Therefore, poor people spend a greater proportion of their income on food compared to those with higher incomes.

Since the Income Elasticity for Food Is Estimated to Be