If the income elasticity of demand for laptops is 3.5,you know that laptops are a(n)________ good.
A) substitute
B) inferior
C) luxury
D) necessity
E) complement

Question

Quizplus · Accepted Answer

The income elasticity of demand measures the percentage change in quantity demanded in response to a 1% change in income. A value greater than 1 indicates that the good is a luxury, meaning that as income increases, demand for the good will increase at a proportionally higher rate. Therefore, with a income elasticity of demand of 3.5, laptops are considered a luxury good.

If the Income Elasticity of Demand for Laptops Is 3