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Demand for a good falls because others are also consuming it, reflecting a desire to be exclusive and dissociate from the common herd. This describes which effect?
ADemonstration effect
BBandwagon effect
CSnob effect
DIncome effect
Answer & Solution
Correct answer: C. Snob effect
1. The bandwagon effect increases demand because others consume the good.
2. The snob effect is the opposite: demand decreases because others are consuming it.
3. It reflects the desire to be exclusive and dissociate from the common herd.
4. The description matches the snob 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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