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

Question

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

Quizplus · Accepted Answer

The larger the proportion of income spent on a product, the more sensitive consumers are to price changes, making their demand more elastic. This is because a significant price increase for a product that takes up a large portion of their budget would likely lead them to reduce consumption or seek alternatives.

The Larger the Proportion of Income Spent on a Product