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From the information in the following table, calculate the income elasticity of demand for this good if income increases from $10,000 to $20,000, and if income increases from $40,000 to $50,000.
Income
Quality demanded
$10,000
50
$20,000
60
$30,000
80
$40,000
110
450,000
170
1. Is this a normal good or an inferior good? How can you tell?
2. Does the proportion of household income spent on this good increase or decrease as income increases?
3. Is this good considered an economic luxury, an economic necessity or neither? Why?
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