FACTOR 2 Proportion of Income The percentage of your income that you spend on a good or service is another factor that affects elasticity. Suppose that photography is your hobby, and you spend about 10 percent of your income on a digital camera, memory cards, software programs, and lenses. If the price for any of these rises even slightly, your demand will likely fall because you just don't have any more money to spend on your hobby. Your demand is elastic. At the same time, demand for products that cost little of your income tends to be inelastic. For example, if the cost of pencils or ballpoint pens rose, would you buy fewer pencils and pens? Probably not. You spend so little on these items that you could easily pay the increase. If the level of your income increases, you are likely to increase your demand for some goods or services. Suppose you ordinarily see one movie per month. If your income increases, you may choose to attend the movies several times a month. 1. How does the proportion of income spent on an item explain its elasticity