Question

Q. With reference to Engel's law, which of the following statements is/are correct?

Select the correct answer using the code given below:

• A. 1 only
• B. 1 and 3 only
• C. 2 and 3 only
• D. 1, 2, 3 only

Answer 1

The correct option is B 1 and 3 only

Explanation:

Statement 1 is correct: The amount and quality of food a family can consume in a week or month are fairly limited in price and quantity and thus with an increase in income, food expenditure declines.

Statement 2 is incorrect: With the increase in income, proportionate expenditure on food decreases.

Statement 3 is correct: As food consumption declines, luxury consumption and savings increase in turn due to higher income.