The income elasticity of demand being greater than one, the commodity must be a _______.

necessity

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luxury

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inferior good

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none of these

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Solution

The correct option is A luxury
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 must be a _______.

The correct option is A luxuryAccording 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.

The correct option is A luxury
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.