A good whose income elasticity is always greater than 1 across income ranges is best described as a

A good whose income elasticity is always greater than 1 across income ranges is best described as a

• A. Normal good.
• B. Luxury good.
• C. Normal good with elasticity greater than 1.
• D. Inferior good.

Answer: (B)

Income elasticity of demand shows how responsive quantity demanded is to changes in income. When this elasticity is positive, the good is normal; when it is greater than 1, demand rises more than proportionally as income increases, which characterizes a luxury good. Since the statement specifies that the income elasticity is always greater than 1 across income ranges, the best description is a luxury good. That distinguishes it from normal goods (where elasticity is positive but not necessarily above 1) and from inferior goods (where elasticity is negative).

Income elasticity of demand shows how responsive quantity demanded is to changes in income. When this elasticity is positive, the good is normal; when it is greater than 1, demand rises more than proportionally as income increases, which characterizes a luxury good. Since the statement specifies that the income elasticity is always greater than 1 across income ranges, the best description is a luxury good. That distinguishes it from normal goods (where elasticity is positive but not necessarily above 1) and from inferior goods (where elasticity is negative).