If the income elasticity of demand is 1.2, the good will be a(n):
A) complement good.
B) substitute good.
C) necessity good.
D) inferior good.
E) luxury good.

Name: If the income elasticity of demand is 1.2, the good will be a(n): A) complement good. B) substitute good. C) necessity good. D) inferior good. E) luxury good.
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Question

Quizplus · Accepted Answer

An income elasticity of demand greater than 1 indicates a luxury good, meaning that as income increases, demand for the good increases more than proportionally.

If the Income Elasticity of Demand Is 1