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A good or service not considered essential. Examples of luxuries include massages, gold watches and sail boats. Luxuries are often, but not always, fairly expensive. Luxury industries tend to be fairly prone to hard downturns during a recession. For example, if one is concerned for one's own job security, one is less likely to splurge on a massage. However, some luxury products, such as custom yachts, are considered recession-proof because they only appeal to the ultra-wealthy, who remain wealthy even in hard times.
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luxury productany product the consumption of which varies considerably with changes in INCOME - for example, electrical appliances, holidays and entertainment. Luxury products have an INCOME ELASTICITY OF DEMAND much greater than 1. This means that as incomes rise, proportionally more income is spent on such products. Contrast STAPLE PRODUCTS. See ENGEL's LAW, NORMAL PRODUCT, INFERIOR PRODUCT, GIFFEN GOOD.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005