When the consumer spends a large portion of her income on a good, demand will be
A) elastic.
B) unit-elastic.
C) inelastic.
D) elastic, unit-elastic or inelastic depending upon supply.

Question

Quizplus · Accepted Answer

When a consumer spends a large portion of their income on a good, the demand for that good tends to be elastic because the consumer is more sensitive to price changes. If the price increases significantly, the consumer is likely to reduce their consumption of that good since it constitutes a large part of their budget.

When the Consumer Spends a Large Portion of Her Income