Which of the following items is likely to have the highest income elasticity of demand?
A)a luxury cruise to several European countries
B)water
C)breakfast cereal
D)a hamburger

Question

Quizplus · Accepted Answer

Luxury goods such as a cruise are likely to have a higher income elasticity of demand, meaning as income increases, demand for the good increases proportionally more. In contrast, necessities such as water and basic food items like breakfast cereal and hamburgers are likely to have relatively lower income elasticity of demand.

Which of the Following Items Is Likely to Have the Highest