... Sweatshirts coefficient suggests than a 1% rise in incomes leads to a 2.4% rise in the demand. That result may reflect consumer's perceptions of sweatshirts as "luxury" goods. (A luxury good has income elasticity larger than one). Income elasticity of demand is an important concept to firms considering the future size of the market for their product. The Sweatshirts have a much higher income elasticity of demand compared to Trousers and T- shirts, the Noxt's managing director should insight that the sales of them are likely to expand rapidly as national income rises; as a result, the company should largely produce these products in order to gain the bigger profit of sales and target the market share. To same extent, the company can increasingly produce the amount of Trousers and T- shirts. However, this good sales trend may also fall significantly if the economy moves into recession. Furthermore, the lower ...

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