Demand for a luxury item, such as a yacht, is likely to be
A)both income inelastic and price inelastic.
B)both income elastic and price elastic.
C)income elastic and price inelastic.
D)income inelastic and price elastic.

Question

Quizplus · Accepted Answer

Luxury items like yachts tend to be income elastic because demand increases significantly with higher income. They are also price elastic because consumers are sensitive to price changes, often opting out of purchasing if prices rise.

Demand for a Luxury Item, Such as a Yacht, Is