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Demand

The demand of a veblen good.

Veblen goods are goods that do not follow the basic law of demand because the quantity demanded of the good increases as the price increases. Veblen goods show characteristics of inelastic goods. This happens because the good is demanded not only for quality, but because it makes the person who buys it look rich. In this way the good is a status symbol and more pleasure is received by the buyer because it is more expensive. Examples: Goods like fine wines, luxury cars, and yachts all have the possibility of following this trend. In a graph of supply and demand, the demand curve slopes up instead of down. Although there are examples of goods that seem to be Veblen Goods, there are no goods that have been proven to be Veblen Goods in actuality.

A Rolls Royce is attractive due to its value as a status symbol. A Rolls Royce would not be as prestigous as it is, if it were the same price as a Toyota Corolla. Only a few people can afford it due to its astronomically high price and the higher the price, the more enticing the purchase for some wealthy individuals.

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