Luxuries tend to have small income elasticities and necessities tend to have higher, negative income inelasticities.

Name: Luxuries tend to have small income elasticities and necessities tend to have higher, negative income inelasticities.
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Question

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Luxuries tend to have high income elasticities because demand for them increases significantly with income, while necessities have low, positive income elasticities as demand for them changes little with income.

Luxuries Tend to Have Small Income Elasticities and Necessities Tend