<p>In case of normal goods, income elasticity of demand is greater than 0 and in case of luxury goods, it is greater than 1.</p>

<p>Supposing the price of pizza here remain constant at $1, thus when your income increased by 10%, the demand of pizza increased by 25%</p>

<p>Income elasticity of demand = 25/10 = 2.5</p>

<p><strong>2.5 > 0</strong>, hence <strong>normal good</strong></p>

<p><strong>2.5 > 1</strong>, hence <strong>luxury good</strong> </p>

<p>This way, pizza is both normal and luxury good here. </p>

CC BY-SA 3.0
2015-10-18T17:06:58.877Z
2015-10-18T17:06:58.877Z
S.Gupta
<p>Let's say I spend $20$ on pizza with an income of $100$. If my income jumps to $110$, I then spend $25$ on pizza. While my income grew by 10%, my expenditures towards pizza grew by 25%. Hence, I would consider this good a luxury, where $\Delta Q_{D\%} / \Delta I_{\%} &gt; 1$.</p>

<p>How can pizza be considered a normal good in this context.</p>

CC BY-SA 3.0
2015-10-18T16:28:47.860Z
A normal good is just a good where demand increases when income increases, which is what is happening in your situation. Did you mistake the definition with something else?
Kitsune Cavalry
CC BY-SA 3.0
2015-10-18T23:28:13.723Z
Yes, that's what I did. Oops.
Muno
<microeconomics>
How can a good be considered both a luxury and a normal one?
Muno
# How can a good be considered both a luxury and a normal one?

(Asked by: username_0 on 2015-10-18)

Let's say I spend $20$ on pizza with an income of $100$. If my income jumps to $110$, I then spend $25$ on pizza. While my income grew by 10%, my expenditures towards pizza grew by 25%. Hence, I would consider this good a luxury, where $\Delta Q\_{D\%} / \Delta I\_{\%} > 1$.

How can pizza be considered a normal good in this context.

**Tags:** microeconomics
> **Comments:**
> **username_1**: A normal good is just a good where demand increases when income increases, which is what is happening in your situation. Did you mistake the definition with something else?  
> **username_0**: Yes, that's what I did. Oops.  

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## 1 answers

### Answer by username_2 on 2015-10-18. Score: 3 | Accepted answer

In case of normal goods, income elasticity of demand is greater than 0 and in case of luxury goods, it is greater than 1.

Supposing the price of pizza here remain constant at $1, thus when your income increased by 10%, the demand of pizza increased by 25%

Income elasticity of demand = 25/10 = 2.5

**2.5 > 0**, hence **normal good**

**2.5 > 1**, hence **luxury good**

This way, pizza is both normal and luxury good here.


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