If E m is greater than 1, what type of good is being described?

When the elasticity of demand (E_m) is greater than 1, it indicates that the good in question is a luxury good. This is because a luxury good is characterized by a high sensitivity to changes in income—specifically, as consumer income increases, the quantity demanded for the good increases at a greater proportion. This means that consumers allocate a larger portion of their income to these types of goods when they experience an increase in wealth, reflecting their preferences for higher-quality or non-essential items.

Luxury goods often enhance the lifestyle or status of consumers and are not merely consumed out of necessity. As such, they demonstrate how consumers vary their spending as income rises; a slight increase in income can lead to a significant increase in the quantity demanded. In this context, elasticity estimates help to identify goods that fulfill these criteria and emphasize the nature of consumer behavior in relation to wealth.