The choice that reflects an increase in demand for a luxury good is when the proportion of income spent on it increases as income rises. Luxury goods are characterized by their higher quality and exclusivity, which means that as individuals' incomes grow, they tend to spend a larger portion of their income on these goods.
This phenomenon is tied to the concept of income elasticity of demand, which measures how the quantity demanded of a good responds to changes in consumer income. For luxury goods, as income increases, consumers not only purchase more but also shift their spending patterns, allocating a greater percentage of their wealth towards these premium items. Thus, a direct relationship exists between rising income and an increased share of income devoted to luxury goods, indicating higher demand.
This option aligns with economic behavior observed in higher-income brackets, where individuals often seek to enhance their lifestyles through the acquisition of luxury products. Such behavior illustrates a clear increase in demand driven by the change in consumers' financial capabilities.