Necessity assets are assets
A)with wealth elasticities of less than 1.
B)with wealth elasticities of greater than 1.
C)held by savers for investment.
D)not subject to federal income tax.

Question

Quizplus · Accepted Answer

Necessity assets are goods or services that people must have regardless of their income levels, such as food, housing, and healthcare. Wealth elasticity is a measure of the responsiveness of demand for a good or service to changes in income levels. Since necessity assets have a wealth elasticity of less than 1, it means that the proportion of income spent on these assets decreases as income levels increase, indicating that they are essential goods for which demand remains relatively constant regardless of changes in income levels.

Necessity Assets Are Assets