The price of wheat increases, but few people cut back on their consumption of bread because:
A) the price of bread is a small portion of the budget, and thus the demand for bread is inelastic.
B) the price of bread is a large portion of the budget, and thus the demand for bread is elastic.
C) change in the price of wheat does not affect the price of bread.
D) None of the answers is correct.

Question

Quizplus · Accepted Answer

The demand for bread is likely inelastic because the price of bread is a small portion of most people's budgets and therefore the price increase of wheat is unlikely to cause people to cut back on their consumption of bread.

The Price of Wheat Increases, but Few People Cut Back