The smaller the proportion of your income is spent on a good, the more likely it is to be:
A) relatively inelastic.
B) highly elastic.
C) perfectly elastic.
D) unit elastic.

Question

Quizplus · Accepted Answer

When a smaller proportion of income is spent on a good, the price elasticity of demand for that good tends to be relatively inelastic. This means that changes in price have a smaller effect on the quantity demanded, as it is not a major budget item for consumers.

The Smaller the Proportion of Your Income Is Spent on a Good