The share of food expenditure in total expenditure for Urban consumer and Rural consumer in India was…
Engel's law predicts a falling food expenditure share as income rises, consistent with the supplied urban and rural changes. Falling production or purchasing power is not…
Choose your answer
The share of food expenditure in total expenditure for Urban consumer and Rural consumer in India was 56% and 64% respectively in (1987-88) and which changed to 41% and 54% in (2009-10). This is appropriately explained by which of the following ?
Answer and explanation
Correct answer C
Engel's law predicts a falling food expenditure share as income rises, consistent with the supplied urban and rural changes. Falling production or purchasing power is not needed. Diminishing marginal utility alone does not establish this budget-share relation.
Practice for these exams
-
UGC NET Economics