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Question
State whether the following statement is true or false. Give valid reasons in support of your answer.
Luxury goods often have lower price elasticity of demand.
Options
True
False
Solution
The statement 'Luxury Goods often have a lower price elasticity of demand' is False.
Luxuries are the goods which are not essential, rather, they are consumed for leisure or comfort purposes. For example, an air conditioner, branded garments, etc. The demand for such goods is highly responsive to changes in their prices. A rise in the price reduces the demand for them and vice-versa. Thus, such goods have high price elasticity.
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