The correct answer is: B. Luxury item.
A luxury item is a good or service that has a high income elasticity of demand, meaning that its demand increases more than proportionately with an increase in income. This means that as people become wealthier, they are more likely to spend a larger proportion of their income on luxury items.
Necessity items are goods or services that are essential for survival, such as food, water, and shelter. The demand for necessity items is relatively inelastic, meaning that it does not change much in response to changes in income. This is because people will still need to purchase these items even if their income decreases.
Inferior goods are goods or services that people tend to buy less of as their income increases. This is because as people become wealthier, they are able to afford to purchase higher-quality goods and services that are substitutes for inferior goods.
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