The table in the textbook shows that income elasticity of food in industrialized nations is
A) higher than in less industrialized nations
B) negative
C) income elastic
D) lower than in less industrialized nations
E) the same as in less industrialized nations because food is an essential good

Question

Quizplus · Accepted Answer

In industrialized nations, the income elasticity of food is lower than in less industrialized nations because as income rises, the proportion of income spent on food increases by a smaller percentage in wealthier countries compared to poorer ones. This is due to the Engel's Law, which suggests that as income rises, the proportion of income spent on food falls, even if absolute expenditure on food rises.

The Table in the Textbook Shows That Income Elasticity of Food