The quantity demanded for cosmetic surgery increased by 12 percent following a period of strong economic growth that raised consumer income by 4 percent. What type of good is cosmetic surgery?
A) It is a luxury good since the income elasticity of demand exceeds 1.
B) It is a normal good since the income elasticity is less than 1.
C) It is a necessity since the income elasticity of demand is equal to 1.
D) It is a supernormal good since the income elasticity is greater than 2.

Question

Quizplus · Accepted Answer

The fact that the quantity demanded for cosmetic surgery increases by a greater percentage than the increase in consumer income indicates that it is a luxury good with an income elasticity of demand greater than 1. This means that as consumers' incomes rise, they will allocate a greater proportion of their overall spending towards cosmetic surgery, which is seen as a discretionary purchase.

The Quantity Demanded for Cosmetic Surgery Increased by 12 Percent