If a good has an income elasticity of 1.83,then it:
A) is a normal good, and a necessity.
B) is an inferior good, and a necessity.
C) probably has a lot of close substitutes available.
D) is a luxury.

Question

Quizplus · Accepted Answer

A good with an income elasticity of 1.83 is considered a luxury good. This means that as income increases, the demand for the good will increase at a faster rate than income. Luxury goods are not considered necessities and often have higher price tags or are seen as more "optional" purchases.

If a Good Has an Income Elasticity of 1