Advertisements
Advertisements
प्रश्न
Why are prestige good an exception to the law of demand?
Advertisements
उत्तर
Many goods have prestige value; that is, they increase the status of consumers who own or use them. These are called prestige goods. Jewellers and fashionable clothing and luxurious cars are examples of these prestige goods. The law of demand does not apply in case of prestige goods the demand for prestige goods increases when their price is high. Such goods are mainly purchased because their price is high. A fall in their price may lead the rich people to buy less because now the rich's desire for display is not satisfied. American economist Veblen was the first to explain this exception. So, prestige goods are known as Veblen goods.
APPEARS IN
संबंधित प्रश्न
Distinguish between:
Inferior goods and superior goods
State with reason whether you agree or disagree with the following statement:
When the prices of Giffen goods falls, demand for such goods rises.
 |
 |
Questions:
- Diagram’ A ‘represents _____in demand (1m)
- Diagram ‘B’ represents _____in demand (1m)
- In diagram ‘A’ movement of demand curve is in_____ direction (1m)
- In diagram ‘B’ movement of demand curve is in______ direction (1m)
State with reasons whether you agree or disagree with the following statement:
There is a direct relationship between the price of Giffen goods and its demand.
State with reason whether you agree or disagree with the following statement.
When price of Giffen goods fall, the demand for it increases.
State with reason whether you agree or disagree with the following statement:
When price of Giffen goods fall, the demand for it increases.
“The inverse relationship between price and quantity demanded does not hold good in many cases.”
- Justify the above as Yes or No.
- If justified, explain in brief the Giffen Effect.
State two circumstances under which the demand curve slopes upwards to the right.
Give one point each of similarity and dissimilarity between Giffen goods and Veblen goods.
Which exception to the law of demand is primarily based on consumer beliefs about product quality?
