Untitled document.docx - 15 One of the determinants of elasticity is the proportion of income spent on a good or service The higher the proportion of

Untitled document.docx - 15 One of the determinants of...

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15. One of the determinants of elasticity is the proportion of income spent on a good or service. The higher the proportion of income spent on a good, the larger the price elasticity of demand for that good. People in developing countries have low incomes and therefore spend a large part of it on food. For example, in Tanzania 62% of income is spent on food. On the contrary, in U.S. only 12% of
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