... luxuries (both have a positive coefficient of income elasticity). Necessities have an income elasticity of demand of between 0 and +1. Demand rises with income, but less than proportionately. Often this is because there is a limited need to consume additional quantities of necessary goods as real living standards rise. Examples of this would be the demand for fresh vegetables, toothpaste and newspapers. Demand is not very sensitive at all to fluctuations in income in this sense, total market demand is relatively stable following changes in the wider economic (business) cycle. Luxuries are said to have an income elasticity of demand> +1. (Demand rises more than proportionate to a change in income). Luxuries are items consumers can (and often do) manage to do without during periods of below average income and falling consumer confidence (slumps). When incomes are rising strongly and consumers have the confidence to purchase expensive items, ...

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