Goods that consumers regard as luxuries generally have
A) an income elasticity equal to 1.
B) an income elasticity less than 1.
C) an income elasticity greater than 1.
D) a negative income elasticity.

Question

Quizplus · Accepted Answer

Luxuries have an income elasticity greater than 1 because as income increases, the demand for luxury goods increases by a proportionally larger amount.

Goods That Consumers Regard as Luxuries Generally Have