Economics • Economic BasicsEasy
What is meant by 'Veblen Good' in consumer choice theory?
A. A good for which demand increases as its price increases because it acts as a status symbol.✓ Correct Answer
B. An inferior good whose demand falls when consumer income rises.
C. A necessity good whose demand remains constant regardless of price fluctuations.
D. A product that consumers buy only when it is heavily subsidized by the government.
💡 Solution & Explanation
Veblen goods represent a unique category of luxury products that violate the standard law of demand because their appeal and perceived prestige increase at higher price points, functioning as status symbols. Alternative choices like inferior goods experience falling demand when incomes rise rather than when prices change. Giffen goods are another exception to the demand law, focusing on inferior staples rather than luxury status items.
More Economics Economic Basics questions
- What is the primary implication of 'Crowding Out' effect in fiscal economics when the government increases…
- Which of the following terms describes the total market value of all final goods and services produced within…
- What does the Marginal Propensity to Consume (MPC) measure in Keynesian economics?
- What does the 'Pigouvian Tax' seek to correct in the presence of market externalities?
- In welfare economics, what does the 'Scitovsky Criterion' attempt to resolve?