Max is shopping for a new winter jacket. He is deciding between two coats that have identical features but are made by different brands: Columbia and Michael Kors. The Columbia jacket costs $120 and the Michael Kors jacket costs $300. Max decides to buy the Michael Kors jacket. This indicates that the Michael Kors jacket may be a(n)_____ good.
A)normal
B)inferior
C)Veblen
D)Giffen

Question

Quizplus · Accepted Answer

Veblen goods are luxury items for which demand increases as the price increases, because their higher price makes them appear more desirable or prestigious. Max's choice of the more expensive Michael Kors jacket, despite identical features with the cheaper Columbia jacket, suggests he perceives the Michael Kors jacket as a status symbol or luxury item, characteristic of Veblen goods.

Max Is Shopping for a New Winter Jacket