Necessity Goods
Necessity goods are normal goods with low income elasticity of demand (YED between 0 and 1). As income rises, demand increases but more slowly than income growth. These are goods people feel they must have.
Real World
Tesco's value bread range sees steady sales regardless of economic booms — UK household spending on staple foods rises only about 0.5% for every 1% rise in income, confirming low YED.
Exam Focus
State the YED range (0 < YED < 1) and explain that demand rises proportionally less than income.
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