Answer to Question #223917 in Economics for Max

Question

The income elasticity of demand for luxury good is greater than one. This means that

Answer 1

LUXURY OBJECTS - goods that can be dispensed with in life, not satisfied with the basic needs of a person. The value of the elasticity of demand for consumption is growing, and the share of essential goods is falling. In addition, it should be noted that the demand for such goods is only when a certain level of income is reached, while the demand for basic necessities is positive even at the lowest level of income. This is due to the fact that people at the beginning cause urgent basic needs related to their own survival.