Explanation:

The Economic Survey mentions this concept, which is one of the most basic concepts of Microeconomics. Since UPSC keeps asking micro related Qs, this one is in order. One of the ways to analyze the consumer’s behavior is through Engel’s elasticity. Table 1 below gives the Engel’s elasticity for some selected group of commodities. It may be mentioned that Engel elasticity calculated here refer to the responsiveness of PFCE of a particular commodity group to the aggregate PFCE, at constant 2011-12 prices.

As expected, the Engel elasticity of food items is significantly less than one, confirming the hypothesis that as the income levels rise, the expenditure on food increases less than proportionately.

Within food, the elasticity of products like eggs, meat and fish, vegetables, etc. is higher than that on items like bread, cereals and pulses, etc. While the elasticity of expenditure on health is significantly higher than unity, surprisingly that of education is a little less than unity