Explain how income elasticity classifies goods and why the classification may depend on the consumer's income level.

### What a good answer covers - Income elasticity measures how quantity demanded responds to a change in consumer income. - A value greater than one indicates more-than-proportionate demand growth and is described as a luxury in the note. - A value between zero and one indicates less-than-proportionate growth and is described as a necessity. - A value at or below zero indicates demand does not rise with income and is associated with an inferior good in the note. - Classifications can differ across income groups because preferences and purchasing patterns differ. ### The concept Income elasticity is calculated as the percentage change in quantity demanded divided by the percentage change in income. It describes a relationship for a particular consumer group and context, not an unchanging label attached to a product. The note warns that the same item, such as milk, can be classified differently at different income levels. ### Remember Classify the good for the consumer group being studied, not in the abstract.