Q276
If a good is a luxury, its income elasticity of demand is
A.
Positive and less than 1
B.
Negative but greater than 1
C.
Positive and greater than 1
AnswerD.
Zero
Answer: Option C
Solution
Answer: Option C
Solution:
If a good is a luxury, its income elasticity of demand is Positive and greater than 1. 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.