Which price elasticity factor explains why inexpensive items (such as toothpicks) tend to have less elastic demand than expensive goods (like foreign air travel)?
A) availability of substitutes
B) share of budget
C) definition of a market
D) necessities

Question

Quizplus · Accepted Answer

The share of budget factor explains this phenomenon because inexpensive items like toothpicks make up a very small portion of a consumer's budget, making their demand less sensitive to price changes. In contrast, expensive goods like foreign air travel constitute a larger share of a consumer's budget, making their demand more elastic or sensitive to price changes.

Which Price Elasticity Factor Explains Why Inexpensive Items (Such as Toothpicks)