Economics · Microeconomics - Consumer Behaviour
In the study of consumer behaviour and demand theory, economists sometimes refer to the 'Veblen Effect'. In this context, which one of the following situations best describes the Veblen Effect?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A situation where the demand for a good increases as its price rises because the good is perceived as a symbol of status or prestige.✓
- 2A situation where demand for a good rises because a large number of consumers start purchasing it.
- 3A situation where the demand for a good falls as more individuals begin to own or consume it.
- 4A situation where the demand for a good declines as its price rises because consumers avoid conspicuous consumption.
Correct answer
A situation where the demand for a good increases as its price rises because the good is perceived as a symbol of status or prestige.
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