At the time of the 2024 census: The effects of income and price on consumer choice

HIBAPRESS-RABAT

The effects of income and price on consumer choice

Depending on its resources, a household must make choices between different consumption areas: compulsory expenses (rent, water, energy, etc.), unavoidable expenses (transport, health, etc.) and optional expenses (leisure, vacations, etc.).

Over long periods, the share of expenditure related to food falls and that of expenditure related to housing, leisure and health increases sharply.

The demand for a good varies according to income; income elasticity measures this variation. Depending on the type of good, income elasticity is less than, equal to or greater than 0.

In general, the demand for a good decreases when its price increases, so its income elasticity is said to be negative. An inelastic good is a good whose demand is stable when its price varies.