As people in developing countries become wealthier with economic growth in their economies, over time they:

Question

BlackTom AI · Accepted Answer

Engel's Law states that as household income rises, the proportion of income spent on food falls even if absolute food spending rises. This is linked to income elasticity of demand: necessities like basic food have income elasticities between 0 and 1, meaning consumption increases with income but less than proportionally. Structural transformation in developing economies also shifts spending toward non-food goods and services (education, health, housing, leisure, manufactured goods).

Step-by-step reasoning:
1. Identify the key concept: Engel’s Law and income elasticity for necessities (<1).
2. Use a simple numerical example to make the proportional change clear:
   - Suppose initial monthly income = $100, food spending = $50 → food share = 50%.
   - Income rises to $200, food spending rises to $80 → food share = 80/200 = 40%.
   - Absolute food spending increased by $30, but the share of income spent on food fell from 50% to 40%.
3. Compute proportion of the extra income spent on food: extra income = $100, extra food spending = $30 → 30% of extra income goes to food; the remaining 70% is spent on non-food goods/services.

Why the correct answer is correct:
- The option "spend a decreasing proportion of their extra income on food products and services" directly reflects Engel’s Law and observed income elasticities: food is a necessity, so its income share declines as income rises even though absolute expenditure on food increases.

Why the other choices are incorrect:
- "Spend the majority of their extra income on products made by the agricultural sector": incorrect because most extra income is typically spent on services and manufactured goods, not primarily agricultural products.
- "Spend an increasing proportion of their increasing income on agricultural products": contradicts Engel’s Law; proportion falls, not rises.
- "Spend all of their extra income on products made by the non-agricultural sector": unrealistic and absolute—some extra income still goes to food, housing, savings; not all goes to non-agricultural goods.

Conclusion: The correct answer is "spend a decreasing proportion of their extra income on food products and services," matching the provided answer.

As people in developing countries become wealthier with economic growth in their economies, over time they:单项选择题

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