Other things being equal, the greater the price elasticity of demand for a good, the _____.
A)shorter the period of time consumers have to adjust to price changes
B)larger the proportion of income spent on the good
C)fewer the available substitutes of the good
D)smaller the proportion of income spent on the good
E)fewer the available complements of the good

Question

Quizplus · Accepted Answer

The greater the price elasticity of demand for a good, the larger the proportion of income spent on the good. This is because when consumers spend a significant portion of their income on a good, they are more sensitive to price changes, making the demand for that good more elastic.

Other Things Being Equal, the Greater the Price Elasticity of Demand