Topics
Luxury Goods
A luxury good is a product for which demand increases more than proportionally as consumer income rises. These goods are typically non-essential, often associated with high status or exclusivity, and have a positive income elasticity of demand greater than 1. As income grows, people spend a larger share on these goods, and demand rises significantly.
In the UK, examples of luxury goods include designer clothing (e.g., brands like Burberry or Alexander McQueen) and high-end cars (e.g., Ferrari or Rolls-Royce). When people experience an increase in disposable income, they are more likely to purchase such items.
Another example is expensive watches (e.g., Rolex), which are often seen as symbols of wealth and success. Luxury goods typically have a price inelastic demand; even with price increases, demand tends to remain stable or even rise, as they are seen as status symbols. Understanding luxury goods helps businesses target high-income consumers.
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IB Economics - Income Elasticity of Demand
Study Notes
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1.2.3 Income Elasticity of Demand (Edexcel A-Level Economics Teaching PowerPoint)
Teaching PowerPoints
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4.1.3.2 Income Elasticity of Demand (AQA A-Level Economics Teaching PowerPoint)
Teaching PowerPoints
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Elasticity of Demand Revision Resources
3rd December 2022
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Luxury Goods - Why are Nordic Blueberries so expensive?
27th October 2022
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Marginal Cost - Why are Olympic Curling Stones so expensive?
16th October 2022
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Normal Goods
Topic Videos
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Understanding Prices - Why Hasselblad Cameras Are So Expensive
9th August 2021
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Elasticity of Demand and Supply - Selection of Revision MCQs
Practice Exam Questions
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Demand for cosmetic treatments falls 40% in 2016
13th February 2017
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Price and Income Elasticities - "Match Up" Activity
Quizzes & Activities
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Calculating Income Elasticity of Demand
Topic Videos
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Demand and Supply - 60 Second Challenge (Knowledge Retrieval Activity)
Quizzes & Activities
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Explaining Price Elasticity of Demand
Study Notes