Why Do Marketers Consider Prestige Products to Be an Exception

question 96

Multiple Choice

Why do marketers consider prestige products to be an exception to the law of demand?

• A)Customers are more aware of any price changes to prestige products.
• B)Prestige products such as diamonds,sapphires,and emeralds are nonrenewable resources.
• C)Demand for prestige products often is greater than supply.
• D)Increasing the price of prestige products can make them seem more desirable.
• E)The demand curve for prestige products slopes downward and to the right.

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Definitions:

Cost of Capital

Cost of Capital is the rate of return that a company must earn on its project investments to maintain its market value and satisfy its creditors and investors.

Legal Bankruptcy

A legal process whereby individuals or businesses unable to meet their debt obligations can seek relief from some or all of their debts.

Protective Covenants

Clauses in loan agreements that are designed to protect the lender by restricting the borrower’s actions, such as limiting dividends, adding debt, or asset sales.

Technical Insolvency

A situation where a company is unable to meet its short-term liabilities with its current assets, despite possibly having a greater amount in long-term assets.