Some luxury product manufacturers will purposefully raise prices on their goods in order to reduce sales volume. This strategy may successfully increase sales revenue if the luxury goods are subject to the ________ effect and have relatively ________ demand.

Question

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This is known as the snob effect, where customers are willing to pay a higher price for a luxury product that is exclusive and not easily accessible to others. If the demand for the product is inelastic, a price increase will not drastically affect the quantity demanded, leading to an increase in revenue.

Some Luxury Product Manufacturers Will Purposefully Raise Prices on Their