Income Elasticity Classifications

Inferior

Demand and income change in opposite directions. Examples: fast food, ramen noodles, macaroni and cheese...

Normal

Demand and income change in the same direction. Examples: clothing, housing, education...

Necessities

Normal goods for which demand changes by a smaller percentage than income. Examples: personal care products, school supplies...

Luxuries

Normal goods for which demand changes by a larger percentage than income. Examples: autos, housing, vacations...

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