Which good would you expect to have the highest income elasticity of demand
A)water
B)diamonds
C)hamburgers
D)housing

Question

Quizplus · Accepted Answer

Goods with higher income elasticity of demand are those that are considered luxury or high-end goods. Diamonds are often seen as a luxury good as they are expensive and not a necessity for everyday life. Therefore, the demand for diamonds will increase significantly as consumers' income increases.

Which Good Would You Expect to Have the Highest Income