For a good to be classified as a luxury good, the quantity demanded must:
A) increase.
B) be inelastic.
C) increase less rapidly than income increases.
D) increase more rapidly than income increases.

Question

Quizplus · Accepted Answer

Luxury goods are characterized by their income elasticity of demand, which means that as people's income increases, the demand for these goods increases more rapidly than the increase in income.

For a Good to Be Classified as a Luxury Good