If the income elasticity of demand for a commodity is found to be 0.4, then the commodity concerned is:
A)luxury
B)necessity
C) giffen's goods
D)independent good

Question

Quizplus · Accepted Answer

Necessity goods have an income elasticity of demand between 0 and 1, indicating that demand increases with income, but at a slower rate than income increases. An elasticity of 0.4 fits this description.

If the Income Elasticity of Demand for a Commodity Is