ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A luxury good means an increase in income causes a bigger percentage increase in demand. It means that the income elasticity of demand is greater than one. For example, HD TV’s would be a luxury good. When income rises, people spend a higher percentage of their income on the luxury good.

Detailed explanation-2: -YED – definition Which gives a YED value of (+) 5. The positive sign shows that the goods (holidays) are normal goods, and the value (5) is much greater than 1, which means that holidays are luxury goods. When the relationship is negative, the goods are ‘inferior’ goods.

Detailed explanation-3: -In economics, a luxury good (or upmarket good) is a good for which demand increases more than what is proportional as income rises, so that expenditures on the good become a greater proportion of overall spending. Luxury goods are in contrast to necessity goods, where demand increases proportionally less than income.

Detailed explanation-4: -In economics, a luxury good is a good for which demand increases more than proportionally as income rises. Luxury goods are said to have high income elasticity of demand. In other words, as people become wealthier, they will buy more and more of the luxury good.