Question

Assume that a family spends 35% of its income on housing, 20% on travel-related expenses, 10% on utilities, 25% on health care, and 5% on miscellaneous items. Demand for which category will be most responsive to a change in price?

Answer 1

Answer:

We need the slope of each category.

Explanation:

Having the amount of each category is not enough to find the responsive of each one of them to a change in their prices, we need a measure called elasticity, this indicator measures the responsive of a product to a change in its price.