List I List II Types of Effect Description A. Veblen effect I. Conspicuous consumption B. Snob effect II. Reduction in relative price of commodity C. Bandwagon effect III. Negative network externality D. Substitution effect IV. Positive network externality
Chose the correct answer from the option given below:
Matching Consumption Effects with Descriptions
This question requires matching four specific economic effects related to consumer behavior (Veblen, Snob, Bandwagon, Substitution) with their corresponding descriptions.
Explanation of Matches
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Veblen Effect (A) matches with Conspicuous Consumption (I):
The Veblen effect describes how demand for a good increases as its price increases, primarily because the high price signals status and exclusivity. This is often referred to as conspicuous consumption.
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Snob Effect (B) matches with Negative Network Externality (III):
The snob effect occurs when an individual's demand for a good decreases as more people consume it. This is because the exclusivity value diminishes, representing a negative network externality.
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Bandwagon Effect (C) matches with Positive Network Externality (IV):
The bandwagon effect describes an increase in demand for a good as more people consume it. This is driven by popularity and social trends, illustrating a positive network externality.
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Substitution Effect (D) matches with Reduction in Relative Price (II):
The substitution effect explains how consumers tend to replace relatively cheaper goods with more expensive ones. When the relative price of a commodity decreases, consumers substitute it for other goods.
Based on these explanations, the correct matching is A-I, B-III, C-IV, D-II.
Important Questions from Demand analysis
The supply curve of cars is expected to shift rightwards with:
i. An increase in the price of cars
ii. A decrease in fuel prices
The supply curve of a normal good is ____________ sloping. It depicts ___________ on the x-axis and ___________ on the y-axis.
The demand curve gives the quantity demanded by the consumer at each ____________.
Which of the following statements is INCORRECT in the context of demand function?
Marginal Product is defined as:
