ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Normal goods whose income elasticity of demand is between zero and one are typically referred to as necessity goods, which are products and services that consumers will buy regardless of changes in their income levels.

Detailed explanation-2: -The income elasticity coefficient or YED for normal necessities is between 0 and 1. Normal necessities include basic needs such as milk, fuel, or medicines. Factors such as a change in price or change in consumers’ income do not affect the demand for necessary goods.

Detailed explanation-3: -A score between 0 and 1 is considered inelastic, since variation in price has only a small impact on demand. A product with an elasticity of 0 would be considered perfectly inelastic, because price changes have no impact on demand.

Detailed explanation-4: -If the income elasticity of demand is greater than 1, the good or service is considered a luxury and income elastic. A good or service that has an income elasticity of demand between zero and 1 is considered a normal good and income inelastic.

Detailed explanation-5: -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.