Why are prestige products often an exception to the law of demand?
A) The demand curve for prestige products slopes downward and to the right.
B) Increasing the price of prestige products can make them seem more desirable.
C) Demand for prestige products often is greater than supply.
D) Prestige products such as diamonds, sapphires, and emeralds are nonrenewable resources.
E) Customers are more aware of any price changes to prestige products.

Question

Quizplus · Accepted Answer

Prestige products are often associated with high status and exclusivity. Increasing their price can make them seem even more desirable to consumers, as it reinforces the perception of exclusivity and luxury. This is known as the Veblen effect, which is a phenomenon where an increase in price leads to an increase in demand for luxury goods because it signals prestige and exclusivity. Therefore, prestige products are often an exception to the law of demand, which states that there is an inverse relationship between price and demand.

Why Are Prestige Products Often an Exception to the Law