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Question
'Price is an indicator of quality'. The statement applies to ______.
Options
Bandwagon effect
Snob effect
Veblen effect
Giffen effect
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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.
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