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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.
RELATED QUESTIONS
Distinguish between:
Inferior goods and superior goods
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 statements:
When price of Giffen goods fall, the demand for it increases.
State with reasons whether you agree or disagree with the following statements :
When price of Giffen goods fall, the demand for it increases.
When price of Giffen goods fall, the demand for it increases.
What is contraction in demand?
What are Giffen goods?
Why do people buy more luxury goods when prices go up, defying the usual law of demand?
Which situation is an example of speculation affecting demand?
