Question

Which one of the following is a reason behind an upward sloping demand curve?

Options

• Substitution effect

• Income effect

• Conspicuous consumption

• Law of diminishing marginal utility

Answer 1

Conspicuous consumption

Explanation:

Conspicuous-consumption goods may be sought for their status or prestige, which can make consumers demand more at higher prices. The substitution effect, income effect and diminishing marginal utility generally help explain the usual downward-sloping demand curve.