The Economics of Luxury: Checkpoint 1

Quick checkpoint - five questions on luxury goods, Veblen effects, scarcity, luxury groups and fakes.

Question 1 of 5 How do economists define a luxury good?

Demand rises faster than income It is always made of gold It costs over 1 lakh rupees It is imported

Luxuries have an income elasticity greater than 1.

Question 2 of 5 What is a Veblen good?

A good valued partly because it is expensive A cheap necessity A government service A counterfeit

High prices signal status.

Question 3 of 5 Why do luxury brands limit supply?

To protect exclusivity and pricing power Because they can't make more To lose money Because of laws

Scarcity boosts desirability.

Question 4 of 5 Which group owns Louis Vuitton, Dior and Tiffany?

Kering LVMH Richemont Tata

LVMH is the largest luxury group.

Question 5 of 5 Why do many Indians buy luxury goods abroad?

High import duties in India Luxury is banned in India Only foreigners can buy in India Shops don't exist in India

Lower duties abroad make prices cheaper.

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