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HomeHomework HelpeconomicsLuxury Goods Demand

Luxury Goods Demand

Luxury goods price elasticity of demand measures how sensitive the quantity demanded of luxury items is to changes in their prices. A high elasticity means that a small price change can lead to a large change in demand.

intermediate
2 hours
Economics
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Overview

Luxury goods price elasticity of demand is a crucial concept in economics that helps businesses understand how changes in price can affect consumer demand for high-end products. Luxury goods, which are often seen as non-essential items, can exhibit varying levels of elasticity based on factors such ...

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Key Terms

Price Elasticity
A measure of how much the quantity demanded of a good responds to a change in price.

Example: If the price of a luxury car increases by 10% and demand decreases by 20%, the elasticity is -2.

Luxury Goods
Products that are not essential and are often associated with wealth and high status.

Example: Designer handbags and high-end watches.

Demand
The quantity of a product that consumers are willing and able to purchase at various prices.

Example: High demand for smartphones during holiday sales.

Consumer Behavior
The study of how individuals make decisions to spend their resources.

Example: Luxury consumers may prioritize brand over price.

Market Segmentation
The process of dividing a market into distinct groups of buyers.

Example: Targeting high-income individuals for luxury products.

Brand Perception
How consumers view a brand based on their experiences and marketing.

Example: A luxury brand may be perceived as exclusive and high-quality.

Related Topics

Consumer Demand
Explores the factors influencing consumer demand for various goods.
beginner
Pricing Strategies
Discusses different methods businesses use to price their products.
intermediate
Market Analysis
Analyzes market trends and consumer behavior.
intermediate
Economic Indicators
Examines various indicators that reflect economic performance.
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Key Concepts

Price ElasticityLuxury GoodsDemand SensitivityConsumer Behavior