If a good has an income elasticity of demand greater than one,one might classify that good as
A)a necessity.
B)a luxury.
C)unusual.
D)inelastic.

Question

Quizplus · Accepted Answer

A good with an income elasticity of demand greater than one is a luxury good, meaning that as income increases, the demand for the good increases at a proportionately greater rate. Necessities, on the other hand, have an income elasticity of demand less than one, meaning that as income increases, the demand for the good increases at a proportionately smaller rate. Unusual and inelastic do not apply to this situation.

If a Good Has an Income Elasticity of Demand Greater