Income elasticity of different consumer goods, Managerial Economics

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Income Elasticity of different consumer goods

Commodities

Coefficient of income elasticity

Impact on expenditure

Necessities

Less than unitary (ey< 1)

Less than proportionate change in income

Comforts

Almost equal to unity (ey = 1 )

Almost  proportionate change in income

Luxuries

Greater than unity (ey> 1) M

More than proportionate increase in income


Second, the concept of income elasticity could also be used to describe the 'inferior' and 'regular' goods. The goods whose income elasticity is positive for all levels of income are known as 'regular goods'. Instead, the goods for that income elasticity is negative, further than a specific level of income, are called as 'inferior goods'.


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