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Good X is an inferior good since the amount bought decreases from X1 to X2 as income increases. In economics, inferior goods are those goods the demand for which falls with increase in income of the consumer. So, there is an inverse relationship between income of the consumer and the demand for inferior goods. [1]
The luxury goods market has been on an upward climb for many years. Apart from the setback caused by the 1997 Asian Financial Crisis, the industry has performed well, particularly in 2000. That year, the world luxury goods market was worth nearly $170 billion and grew 7.9 percent. [24]
A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in quantity demanded. If income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.
It expects the global growth rate of the luxury industry to be just 1-3% between 2024 and 2027, with China and Europe, once the centers of luxury spending, contributing less to that expansion.
The United States is the second-largest luxury market, following Europe, worth about 100 billion euros ($106 billion), or nearly one-third of all global high-end sales of apparel, leather goods ...
The personal luxury goods market is facing a significant slowdown in 2024, marking its first major decline (aside from the pandemic) since the global financial crisis. Bain & Company’s report ...
Global sales of personal luxury goods are forecast to shrink in 2025 for the first time since the Great Recession, according to a Bain consultancy study released Wednesday. The outlook could ...
If we look into a simple hypothetical example, the demand for apples increases by 10% for a 30% increase in income, then the income elasticity for apples would be 0.33 and hence apples are considered to be a normal good. Other types of goods like luxury and inferior goods are also classified using the income elasticity of demand.