Economics • Economic BasicsEasy
What is 'Veblen Good' characterized by?
A. Demand increases as the price decreases, defying the law of demand.
B. Demand increases as the price increases because it serves as a status symbol.✓ Correct Answer
C. Demand remains completely unaffected by price changes.
D. It is an inferior good consumed exclusively by low-income groups.
💡 Solution & Explanation
Veblen goods violate the standard law of demand because their consumption is driven by prestige, meaning higher prices increase their perceived exclusivity and demand. Conversely, ordinary goods see a decrease in demand when prices rise, and inferior goods follow different income elasticity rules.
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