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Which law states that with constant taste and preferences, the proportion of income spend on food stuff diminishes as income increases?
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- Say’s Law
- Griffin’s Law
- Gresham’s Law
- Engel’s Law
- Say’s Law
Correct Option: D
According to Engel's Law, as disposable income of a consumer increases, the percentage of income spent for food decreases if all other factors remain constant. This happens even when the actual expenditure on food rises. The income elasticity of demand of food is less than 1. A lower Engel coefficient indicates a higher standard of living.
