McqMate
| Q. |
Engel's Law states the relationship between - |
| A. | quantity demanded and price of a commodity |
| B. | quantity demanded and price of substitutes |
| C. | quantity demanded and tastes of the consumers |
| D. | quantity demanded and income of the consumers |
| Answer» D. quantity demanded and income of the consumers | |
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Explanation: Engel's law is an observation in economics stating that as income rises, the proportion of income spent on food falls, even if actual expenditure on food rises. In other words, the income elasticity of demand of food is between 0 and 1. Engel's Law doesn't imply that food spending remains unchanged as income increases: It suggests that consumers increase their expenditures for food products (in % terms) less than their increases in income. |
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