economics medium Fill in the Blank

While Giffen goods are inferior goods where the negative income effect outweighs the substitution effect, ___ goods are luxury items where demand increases as price rises because they serve as conspicuous status symbols.

  1. Veblen
  2. snob
  3. indifference
  4. 2011-12

Answer: Veblen

Named after sociologist Thorstein Veblen, these goods violate the standard law of demand not due to poverty (like Giffen goods), but due to 'conspicuous consumption.' For items like ultra-luxury watches or designer handbags, a higher price actually enhances their snob appeal and exclusivity, driving up demand among the ultra-wealthy.

Topic Microeconomics - Consumer Behavior
Exam Relevance UPSC Prelims, SSC CGL
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