A necessity is defined as a good having

A positive income elasticity of demand
A negative income elasticity of demand
An income elasticity of demand between zero and 1
An income elasticity of more than 1

The correct answer is: A necessity is defined as a good having a positive income elasticity of demand.

A necessity is a good that people will continue to buy even when their income decreases. This is because necessities are essential for survival or for maintaining a certain standard of living. For example, food, water, and shelter are all necessities.

Income elasticity of demand is a measure of how much the demand for a good changes in response to a change in income. A positive income elasticity of demand means that the demand for a good increases when income increases. This is because people with more money can afford to buy more of the good. A negative income elasticity of demand means that the demand for a good decreases when income increases. This is because people with more money can afford to buy other goods that they prefer.

An income elasticity of demand between zero and 1 means that the demand for a good is not very responsive to changes in income. This is because the good is not a necessity and people are not willing to spend a lot of money on it. An income elasticity of demand of more than 1 means that the demand for a good is very responsive to changes in income. This is because the good is a necessity and people are willing to spend a lot of money on it.

Exit mobile version