how-does-the-share-of-a-consumers-budget-allocated-to-a-product-affect-its-price

Question

How does the share of a consumer's budget allocated to a product affect its price elasticity of demand?

Accepted Answer

Products that take up a larger share of the budget tend to have more elastic demand.

Answer

Products that take up a smaller share of the budget tend to have more elastic demand.

Answer

The budget share has no impact on elasticity.

Answer

Products with a larger budget share have perfectly inelastic demand.