Question 8
Theory of DemandThe demand curve for a luxury good is
- A.negatively sloped
- B.parallel to the price axis
- C.parallel to the quantity axis
- D.positively sloped
Show the answer and explanation
Answer: D (positively sloped)
Explanation
Luxury (prestige) goods are bought partly to show off, so more is demanded at a higher price, giving an upward-sloping (abnormal) demand curve.