"Different types of goods have different IEDs (see Figure 19.1): **Normal goods have a positive IED. If an IED is less than 1, the good is a necessity – demand doesn’t rise much in good times, nor does it fall back too much in bad times**; examples are fresh fruit and vegetables, even tobacco. **If an IED is greater than 1, the good is a superior good – people buy it aplenty in good times, but cut back in bad times**; examples are books, meals out. "I**f an IED is greater than 2, the good is a luxury – demand fluctuates widely between good and bad times**; examples are sports cars, haute couture, Michelin-starred restaurants, holidays in the Seychelles. **If an IED is around 0, the good is inelastic or sticky – demand doesn’t change much in relation to changes in income**; examples are bread, baked beans. **If an IED is less than 0, the good is an inferior good – demand drops during the good times and returns in bad times**: the classic examples are margarine and bus travel. ([Location 1536](https://readwise.io/to_kindle?action=open&asin=B00BU0NELQ&location=1536)) --- **Tags** -- [[quotes]], [[elasticity]], [[supply-and-demand]] **Source** -- [[20250317012611 - B - Key Strategy Tools]]