how does the expenditure share influence its price elasticity of demand ?

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Solution

The goods that account for a very small proportion of a consumer’s income such as, salt, newspaper, etc. will have an inelastic demand. On the other hand, the goods that account for a very large proportion of a consumer’s income such as, clothes, house rents, etc. will have an elastic demand.

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How does the nature of a commodity influence its price elasticity of demand?

Explain.

If price elasticity of demand is zero, it means expenditure on the commodity does not change with change in price of the commodity.

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Q. Price elasticity of demand is dependent upon:
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Select the correct answer from the options given below -

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