Engel's law


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Engel's law

a principle that states that consumers will tend to spend an increasing proportion of any additional income upon LUXURY GOODS and a smaller proportion on STAPLE GOODS, so that a rise in income will lower the overall share of consumer expenditures spent on staple goods (such as basic foodstuffs) and increase the share of consumer expenditures on luxury goods (such as motor cars). See INFERIOR PRODUCTS, INCOME ELASTICITY OF DEMAND, INCOME CONSUMPTION CURVE, AGRICULTURAL POLICY.