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The income elasticity of demand being greater than one, the commodity must be
- a)a necessity
- b)a luxury
- c)an inferior good
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
The income elasticity of demand being greater than one, the commodity ...
According to the income elasticity of demand if the percentage change is quantity demanded is more than proportionate to the percentage change in income then the good is classified as a luxury good.
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The income elasticity of demand being greater than one, the commodity ...
Explanation:
Income elasticity of demand refers to the responsiveness of quantity demanded to a change in income of consumers. If the income elasticity of demand for a commodity is greater than one, it is known as a luxury good.
Luxury goods are those goods whose consumption increases with an increase in consumer income. For example, a luxury car, high-end smartphones, designer clothing, expensive jewelry, etc. People tend to buy more of these goods when their income increases and less when their income decreases.
On the other hand, if the income elasticity of demand for a commodity is less than one, it is known as a necessity good. Necessity goods are those goods whose consumption remains the same even when consumer income changes. For example, food, water, shelter, basic clothing, etc. People tend to buy the same amount of these goods regardless of their income level.
Conclusion:
In conclusion, the income elasticity of demand being greater than one indicates that the commodity is a luxury good. This means that as consumer income increases, the demand for the commodity increases at a higher rate.
Income elasticity of demand refers to the responsiveness of quantity demanded to a change in income of consumers. If the income elasticity of demand for a commodity is greater than one, it is known as a luxury good.
Luxury goods are those goods whose consumption increases with an increase in consumer income. For example, a luxury car, high-end smartphones, designer clothing, expensive jewelry, etc. People tend to buy more of these goods when their income increases and less when their income decreases.
On the other hand, if the income elasticity of demand for a commodity is less than one, it is known as a necessity good. Necessity goods are those goods whose consumption remains the same even when consumer income changes. For example, food, water, shelter, basic clothing, etc. People tend to buy the same amount of these goods regardless of their income level.
Conclusion:
In conclusion, the income elasticity of demand being greater than one indicates that the commodity is a luxury good. This means that as consumer income increases, the demand for the commodity increases at a higher rate.
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The income elasticity of demand being greater than one, the commodity must be a)a necessity b)a luxury c)an inferior good d)None of the aboveCorrect answer is option 'B'. Can you explain this answer?
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The income elasticity of demand being greater than one, the commodity must be a)a necessity b)a luxury c)an inferior good d)None of the aboveCorrect answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The income elasticity of demand being greater than one, the commodity must be a)a necessity b)a luxury c)an inferior good d)None of the aboveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The income elasticity of demand being greater than one, the commodity must be a)a necessity b)a luxury c)an inferior good d)None of the aboveCorrect answer is option 'B'. Can you explain this answer?.
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