Advertisements
Advertisements
Question
'Price is an indicator of quality'. The statement applies to ______.
Options
Bandwagon effect
Snob effect
Veblen effect
Giffen effect
Advertisements
Solution
'Price is an indicator of quality'. The statement applies to Snob effect.
Explanation:
In microeconomics, the snob effect refers to consumers demand for rare and expensive products to differentiate themselves from the majority. The product's pricing indicates its quality. Consumers value uniqueness and choose to pay more.
APPEARS IN
RELATED QUESTIONS
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.
PASSAGE
Mona visits a shopping mall near her residence. She shops for monthly groceries which include rice, wheat, sugar, cooking oil and pulses. She purchases additional quantities of sugar much more than her monthly requirement anticipating that prices may rise in the coming days due to festivities.
She observes two different qualities of tur dal out of which one quality is inferior and the other is superior. She does not purchase the low quality tur dal even though its price is comparatively lower. Instead she prefers to buy superior quality tur dal.
- Identify the exception to the law of demand in the given passage with reference to purchase of additional quantities of sugar much more than monthly requirement anticipating that prices may rise in the coming days due to festivities (1mark)
- Identify the kind of good with reference to low quality tur dal (1mark)
- Express your personal opinion based on the above information. (2 marks)
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 reasons 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 statements:
When price of Giffen goods fall, the demand for it increases.
In which exception to the law of demand does the consumer equate price and quality.
State with reasons whether you agree or disagree with the following statement:
When price of Giffen goods fall, the demand for it increases.
Which exception to the law of demand is primarily based on consumer beliefs about product quality?
