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Question
'Price is an indicator of quality'. The statement applies to ______.
Options
Bandwagon effect
Snob effect
Veblen effect
Giffen effect
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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RELATED QUESTIONS
Distinguish between:
Inferior goods and superior goods
Statements that explain Giffen’s paradox:
- It is an exception to the law of demand.
- It is applicable to inferior or low quality goods.
- Demand increases when the prices of inferior goods fall
- It was identified by Prof. Alfred Marshall.
State with reason whether you agree or disagree with the following statement:
When the prices of Giffen goods falls, demand for such goods rises.
Questions:
- Demand Curve D1D1indicates ______ (1m)
- Demand Curve D2D2indicates______ (1m)
- Name the above diagram and explain. (2m)
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 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?
Give one point each of similarity and dissimilarity between Giffen goods and Veblen goods.
What are Giffen goods?
