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

Question

Quizplus · Accepted Answer

A high income elasticity of demand (above 1) indicates that the good is a luxury, meaning that as income increases, demand for the good increases at a greater rate. This is likely the case for laptops, which are not necessarily essential but are often considered a desirable item that becomes more affordable as income rises.

If the Income Elasticity of Demand for Laptops Is 3