Luxury Goods
Luxury goods have income elasticity greater than 1 - demand increases more than proportionately with income. These are goods that are not necessities and whose consumption is deferred during hard times.
Real World
LVMH, owner of Louis Vuitton and Dior, saw record revenue of €86 billion in 2023 as rising incomes among wealthy consumers drove demand for handbags and fashion far faster than GDP growth.
Exam Focus
Link luxury goods to income elasticity greater than 1 — examiners reward precise numerical thresholds rather than vague descriptions like 'high elasticity'.
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