Proportion of Income spent on the commodity Assignment Help

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Proportion of Income spent on the commodity:

If the price of a good is relatively low such the expenditure on it is an insignificant fraction of most individual or family incomes, then consumers of such a commodity are insensitive to a price change of the good.  It tends to have inelastic demand.  On the other hand, if the price is high and the proportion of income(s) spent on it large then it tends to have elastic demand.  For example, salt has relatively low price in Ghana and familites spent insignificant percentage of their incomes on salt.  Therefore even if the price of salt doubles, people find little difficulty in buying the same quantity they used to buy.

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