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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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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 reason whether you agree or disagree with the following statements:
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.
State with reasons whether you agree or disagree with the following statement:
When price of Giffen goods fall, the demand for it increases.
What is contraction in demand?
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.
Explain the following diagram with reference to the concept of Giffen goods.
The demand curve can slope upwards from left to right. Give one argument in support of this statement.
Which of the following best describes a Giffen good?
