Question

Some economists believe that there are goods that do no obey the law of demand, because the demand for them would actually drop if their price fell.
One example is a top-of-the-line luxury car.
Why do you think prospective buyers might feel differently about these goods?

Answer 1

Answer:

The goods are termed Giffen goods. Normally, the higher the price of a commodity, the lower the quantity demanded, and the lower the price, the higher the quantity of that same commodity.

The higher the price of a Giffen good, the higher consumers will demand it, thus, violating the law of demand. If the price drops, prospective buyers might feel the commodity has become inferior and might purchase a close substitute of that commodity, though, substitute goods are quite rare.

Answer 2

Consumers feel differently about these goods which defy the law of demand because they are essential goods and a mark of value and status.

The goods described are called Giffen and Veblen goods.

What are Giffen and Veblen goods?

Giffen goods are those goods that are necessary and will rise in demand when prices rise. Veblen goods are luxury goods that see their demand rise when prices rise because they will be more valuable.

As giffen goods such as rice have no close substitutes, people have to buy them even when prices increase. Veblen goods are more valuable when they are expensive because they are a mark of status.

Find out more on giffen goods at https://brainly.com/question/2284700.