Explanation:

Elasticity of Demand is defined as the responsiveness of demand when a consumer’s income changes. It is defined as the ratio of the change in quantity
demanded over the change in income. The higher the income elasticity, the more sensitive demand for a good is to changes in income. This means that a very high-income elasticity of demand suggests that when a consumer’s income goes up, consumers will buy a lot more of that good and, reciprocally, when income goes down consumers will cut back their purchases of that good to an even higher degree. Very low price elasticity implies that changes in a consumer’s income will have little effect on demand.

Luxury goods represent normal goods associated with income elasticity of demand greater than one i.e. with increase in income, demand for luxury goods increase by a higher proportion. Goods whose income elasticity of demand is between zero and one are typically referred to as necessity goods. Inferior goods have a negative income elasticity of demand i.e. as consumers’ income rises, and they buy fewer inferior goods.