is demand for luxury goods elastic or inelastic

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  • What is the price elasticity of demand for luxury goods?

  • Luxury goods and services have an income elasticity of demand +1 i.e. demand rises more than proportionate to a change in income 鈥?for example a 8% increase in income might lead to a 10% rise in the demand for new kitchens. The income elasticity of demand in this example is +1.25. Herein, are luxury goods price elastic or inelastic?

  • What is a positive income elasticity of demand?

  • A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand. If income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.

  • What is the difference between elastic and inelastic demand?

  • Elastic demand means there is a substantial change in quantity demanded when another economic factor changes (typically the price of the good or service), whereas inelastic demand means that there is only a slight (or no change) in quantity demanded of the good or service when another economic factor is changed.

  • What is the cross elasticity of demand?

  • The cross elasticity of demand is an economic concept that measures the responsiveness in the quantity demanded of one good when the price for another good changes. Elastic is a term used in economics to describe a change in the behavior of buyers and sellers in response to a change in price for a good or service.

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