What Does the Demand Curve for a Prestige Product Look

question 40

Multiple Choice

What does the demand curve for a prestige product look like?

• A) It is a straight line where the quantity sold continues to increase as the price of each product increases.
• B) It is a curve where the highest and the lowest prices yield the greatest quantity sold and mid-range prices produce the fewest sales.
• C) It forms a curve where the greatest quantity sold comes at a medium price and the quantities fall as the price increases or decreases.
• D) It forms a straight vertical line because of the prestige of the product, and quantity sold will remain stable regardless of the price.
• E) It slopes from left to right at a very mild slope, and as quantity increases, price decreases slowly.

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Definitions:

Dominant Firms

Companies that hold a significant share of market power in their industry, often able to influence market conditions and prices.

New Firms

New firms are businesses that have been recently established, entering the marketplace with the intention to offer goods or services.

Creative Destruction

A process through which new innovations cause older technologies or models to become obsolete, promoting progress but also potentially leading to job losses.

Economic Recession

A temporary downturn in economic activity, characterized by decreased trade and industrial output, usually marked by a decrease in the Gross Domestic Product (GDP) for two consecutive quarters.