Question

Q. With reference to the Snob effect, consider the following statements:

Select the correct answer using the codes given below:

• A. 1 only
• B. 2 only
• C. 1 and 3
• D. 1, 2 and 3

Answer 1

The correct option is C 1 and 3

Explanation:

• Statement 1 is correct: The snob effect is the desire to acquire certain exclusive or differentiated goods.
• Statement 2 is incorrect: The quantity demanded of a commodity having a snob value is greater, the smaller the number of people owning it. As a result of the snob effect, the quantity demanded of the good falls as more people are believed to own it.
• Statement 3 is correct: The snob effect occurs when the relationship between price demand is positive, which makes the demand curve positive as well.

This effect causes that, when the price increases, the demand also increases. It is the effect that occurs contrary to the normal goods.