The correct answer is C. Positive and greater than 1.
A luxury good is a good for which the demand increases more than proportionately with an increase in income. This means that if a person’s income increases by 10%, they will spend more than 10% more on luxury goods.
The income elasticity of demand is a measure of how responsive the demand for a good is to changes in income. It is calculated by dividing the percentage change in the quantity demanded of a good by the percentage change in income.
For a luxury good, the income elasticity of demand is positive and greater than 1. This means that the demand for a luxury good increases more than proportionately with an increase in income.
Option A is incorrect because the income elasticity of demand for a necessity is positive and less than 1. This means that the demand for a necessity increases, but not as much as proportionately, with an increase in income.
Option B is incorrect because the income elasticity of demand for a normal good is positive and less than 1. This means that the demand for a normal good increases, but not as much as proportionately, with an increase in income.
Option D is incorrect because the income elasticity of demand for a good is zero if the demand for the good does not change with an increase in income.