Q.A consumer's monthly income rises from ₹5,000 to ₹6,000, and as a result the quantity demanded of a commodity rises from 100 units to 130 units per month. Calculate the income elasticity of demand and state what kind of good this is.

Step 1 — Recall the rule

Income elasticity of demand $E_Y$ classifies goods by sign and size:

• $E_Y < 0$ → inferior good
• $E_Y = 0$ → income-inelastic (demand unchanged)
• $0 < E_Y < 1$ → normal good, a necessity
• $E_Y > 1$ → normal good, a luxury

Step 2 — Apply the given value

Here $E_Y = 0.5$. It is positive, so the good is normal (demand rises with income). It is less than 1, so demand rises less than proportionately with income — the mark of a necessity.

Step 3 — Why the other options are wrong

• (A) Luxury would need $E_Y > 1$.
• (B) Inferior would need $E_Y < 0$. …

Step 1 — Recall income elasticity ranges

• $E_y < 0$ → inferior good
• $0 < E_y < 1$ → normal necessity
• $E_y > 1$ → luxury good (superior good)

Step 2 — Apply to the stem

Since $E_y > 1$, demand grows faster than income; consumers devote a rising proportion of income to the good. This is the defining property of a luxury good.

Step 3 — Why the other options are wrong

• (A) Inferior goods — would need $E_y < 0$.
• (B) Normal goods — a broad class ($E_y > 0$); true but not specific, whereas $E_y>1$ pins it to a luxury (which is the precise answer expected). …