Best answer
Luxury good. A luxury good means anincrease in income causes a bigger percentage increase in demand. It means that the income elasticity of demand is greater than one. For example,HD TV鈥檚 would be a luxury good. When income rises,people spend a higher percentage of their income on the luxury good.
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What is an example of a luxury good?
For example, HD TV鈥檚 would be a luxury good. When income rises, people spend a higher percentage of their income on the luxury good. In the above example of a luxury good, income rises (500-550) 10%, demand rises 100/800 鈥?12.5% YED = 12.5/10 = 1.125
Is a luxury item necessary to live?
A luxury item is not necessary to live, but it is deemed as highly desirable within a culture or society. As luxury goods are expensive, wealthy people are disproportionate consumers of luxury goods.
What is the difference between a luxury good and inferior good?
Note: a luxury good is also a normal good, but a normal good isn鈥檛 necessarily a luxury good. An inferior good means an increase in income causes a fall in demand. It is a good with a negative income elasticity of demand (YED). An example of an inferior good is Tesco value bread.
What is the difference between luxury good and necessity good?
If a 1% change in income causes a more than 1% change in quantity demanded of the good, it is known as a luxury good. If a 1% change in income causes a less than 1% change in quantity demanded of the good, the product is known as a necessity good.