Demand for a good which comprises a relatively large share of the consumer's budget tends to be
A)inelastic.
B)perfectly inelastic.
C)elastic.
D)perfectly elastic.

Question

Quizplus · Accepted Answer

When a good comprises a relatively large share of the consumer's budget, any change in price would have a significant impact on the consumer's overall spending. This causes demand to be more sensitive to changes in price, making it elastic. The other options of inelastic, perfectly inelastic, and perfectly elastic do not apply in this scenario.

Demand for a Good Which Comprises a Relatively Large Share