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The desire of people to buy a good simply because they see others able to own it, a term coined by James Duesenberry, is known as which effect?
ASnob effect
BDemonstration effect
CVeblen effect
DSubstitution effect
Answer & Solution
Correct answer: B. Demonstration effect
1. The demonstration effect was coined by James Duesenberry.
2. It refers to the desire of people to emulate the consumption behaviour of others.
3. People buy things because they see that others are able to have them.
4. So the matching term is the demonstration effect.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit I "Law of Demand and Elasticity of Demand", p.4_
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