Question

Conspicuous Consumption in the Market for Smartphones: The laws of demand and supply suggest that the more something costs, the fewer people will purchase it. The exception to this is called a Veblen good. This is something purchased not just for its intrinsic value, but for the pride of owning something very expensive. This has relevance to the way most smartphones are marketed and sold. Provide an economic analysis on the conspicuous consumption in the market for smartphones.

Answer 1

Answer; NOW a days every one

SMARTphones can be considered a normal good for few and luxury good for someone else. ALso it may considered giffin good by few.

But veblen good reflects tastes and prefrences , An increases in price , doesnot alter consumers prefrences , and one would still buy the good. Here law of demand doesnot hold . ALso income effect outweighs substitution effect .

For eg- AN iphone lover , an increase in price will not lead him to switch to some other cheaper unit , rather he will buy an iphone only . as his prefrences are stubborn and independent of price.

using smartphone and the consumption increase dat by day.