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'.