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April 25, 2014

Homework Help: Econ

Posted by Anonymous on Monday, February 26, 2007 at 2:55pm.

Consumer expenditures on safety are thought to have a positive income elasticity. For example, as incomes rise, people tend to buy safer cars, they are more likely to fly on trips than drive, they are more likely to get regular health tests, and they are more likely to get medical care for any health problems the tests reveal. Is safety a luxury or a necessity?


Most goods have a positive income elasticity. Luxury goods are those that have an income elasticity greater than one. So, if income rises by 10% do expenditures on "safety" rise by more than 10%??

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