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luxury


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A good or service whose consumption at any given price rises more than in proportion to an increase in income. The income elasticity of demand for a luxury is thus more than unity. A luxury is therefore a good on which richer people spend a higher proportion of their incomes than do poorer people. This is contrasted with a necessity, whose consumption at any given price rises less than in proportion to income. See also Engel curve.

Subjects: Modern History (1700 to 1945).


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