PRC-3 · Chapter 10 · Question 47 of 70
An exclusive diamond-encrusted watch actually sees an increase in sales when its manufacturer raises the price, because the ultra-wealthy desire it more as a status symbol. This violates the law of demand and is an example of a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Veblen good
Explanation
A Veblen good is a luxury item whose appeal is tied to its high price. Raising the price increases its perceived exclusivity and status, increasing demand.
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