Goods with an income elasticity of demand greater than 1 are called _____
A)necessities.
B)inferior goods.
C)substitutes.
D)luxuries.
E)complements.

Question

Quizplus · Accepted Answer

Goods with an income elasticity of demand greater than 1 are called luxuries, meaning that as income increases, the demand for these goods increases at a proportionally greater rate. Examples of luxury goods include high-end cars, watches, designer clothing, and expensive perfumes.

Goods with an Income Elasticity of Demand Greater Than 1