Answer:
Income elasticity of necessity goods is less than one. The demand is inelastic. That is, the demand is insensitive to price or income
Step-by-step explanation:
Income elasticity of necessity goods is less than one. The demand is inelastic. That is, the demand is insensitive to price or income.
Necessity goods are goods that are needed for human survival. Even if income decreases, consumers will still not change their consumption patter. Example of necessity goods are: water, electricity, gas etc.
Necessity goods is different from luxury goods which will its demand will decrease when income decreases.