When the income elasticity of demand is greater than unity, the commodity is

a necessity
a luxury
an inferior good
a non-related good

The correct answer is: B. a luxury.

A luxury good is a good for which the income elasticity of demand is greater than unity. This means that when income increases, the demand for the good increases by more than a proportionate amount. In other words, people are willing to spend a larger share of their income on luxury goods when they have more money.

Necessity goods are goods for which the income elasticity of demand is less than unity. This means that when income increases, the demand for the good increases by less than a proportionate amount. In other words, people are willing to spend a smaller share of their income on necessity goods when they have more money.

Inferior goods are goods for which the income elasticity of demand is negative. This means that when income increases, the demand for the good decreases. In other words, people are willing to spend less money on inferior goods when they have more money.

Non-related goods are goods for which the income elasticity of demand is zero. This means that when income increases, the demand for the good does not change. In other words, people are willing to spend the same share of their income on non-related goods regardless of their income level.

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