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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?

To determine

Provide the list of normal goods which have income elasticity greater than one and less than one.

Explanation

The normal goods which have income elasticity greater than 1 are known as luxuries. The luxury goods are not essential but these are demanded by rich and wealthy people.

The example for luxury goods are expensive mobile phones, jewelry, expensive cars, etc...

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