The concept of income elasticity of demand is also an explanation of how nations behave when the cost of luxury imports increase in price.

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Income elasticity of demand measures the responsiveness of demand for a good to a change in income, and luxury imports are often income elastic. Therefore, when the price of luxury imports increases, demand for these goods may decrease as consumers may be less willing or able to purchase them, leading to changes in trade patterns and behavior at the national level.

The Concept of Income Elasticity of Demand Is Also an Explanation