Q. With reference to the Snob appeal, which of the following statements is/are correct?
Select the correct answer using the code given below:
Q. With reference to the Snob appeal, which of the following statements is/are correct?
Select the correct answer using the code given below:
The correct option is D 1, 2, 3 only
Explanation:
Statements 1, 2, and 3 are correct: The snob effect is a phenomenon described in microeconomics as a situation where the demand for a certain good by individuals of a higher income level is inversely related to its demand by those of a lower income level. Under snob appeal, people sometimes buy certain commodities like diamonds at high prices not due to their intrinsic worth but for a different reason. The basic object is to display their riches to the other members of the community to which they themselves belong.
Note: Veblen good: A Veblen good is a good where demand rises as price rises because people feel its higher price reflects greater status.
Veblen Good: Prices Increase (Fall)-Demand Increase (Fall)
Explanation:
Statements 1, 2, and 3 are correct: The snob effect is a phenomenon described in microeconomics as a situation where the demand for a certain good by individuals of a higher income level is inversely related to its demand by those of a lower income level. Under snob appeal, people sometimes buy certain commodities like diamonds at high prices not due to their intrinsic worth but for a different reason. The basic object is to display their riches to the other members of the community to which they themselves belong.
Note: Veblen good: A Veblen good is a good where demand rises as price rises because people feel its higher price reflects greater status.
Veblen Good: Prices Increase (Fall)-Demand Increase (Fall)
