Data collected from the imaginary economy of Tralfamadore reveals that a 16% increase in income leads to the following changes: An 18% increase in the quantity of lafgar demanded A 14% decrease in the quantity of kang demanded A 30% increase in the quantity of welk demanded Compute the income elasticity of demand for each of the goods described, and select the appropriate value in the following table

a. The income elasticity of lafgar is 18/16 = 1.125, lafgar is a normal good because the income elasticity of demand is positive.

b.. The income elasticity of kang is -14/16 = -0.875, kang is an inferior good because the income elasticity of demand is negative.

c. The income elasticity of welk is 30/16 = 1.875, welk is a normal good because the income elasticity of demand is positive.

Both Lafgar and Welk are luxury goods because they have an income elasticity of demand that is greater than one. However, since the income elasticity of demand for Welk is higher than that of Lafgar, is most likely to be classified as a luxury good.