<p>I would call the $60,000 car a &quot;Veblen good&quot;.  <a href="https://en.wikipedia.org/wiki/Veblen_good" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Veblen_good</a></p>
<p>The idea is that the consumer is not just buying a product, but is also buying status and a signal of wealth.</p>

CC BY-SA 4.0
2024-11-23T14:05:17.467Z
Isn't a Veblen good one for which the quantity demanded increases as the price increases? The question doesn't say anything about how the demand for a particular quality car changes with price. For the "$60 000 car" (i.e. the car with the highest quality in the example) to be a Veblen good the quantity demanded for it would have to increase with price. However, I do agree that conspicuous consumption (or the snob effect) might come into it.
smcc
CC BY-SA 4.0
2024-11-23T11:24:50.827Z
2024-11-23T11:24:50.827Z
Michael Gmeiner
<p>Imagine a car for 15000 dollars and 30000 dollars, lets say that the 30000 car is 2x more expensive but also 2x higher in quality, now imagine 60000 dollar car that is not 2x the quality but only slightly higher in quality than the 30000 dollar car etc. The quality is now rising disproportionately to the price. You are getting less quality for each unit of money. What is this phenomenon called?</p>

CC BY-SA 4.0
2024-11-23T08:00:38.827Z
I don't think it is called anything. Small increases in quality become more difficult so there is a rising marginal cost. Some people are willing to pay substantial sums for small increases in quality (e.g. a small performance benefit is very important for competitive racers). Put the two together and you get the phenomenon you have observed
smcc
CC BY-SA 4.0
2024-11-23T10:06:01.863Z
Diminishing marginal utility might fit. It's the idea that as consumers spend more the amount of utility they get from each additional dollar spent falls.
williams-ji
CC BY-SA 4.0
2024-11-23T17:19:08.710Z
cars are heterogenous goods. Price depends on several characteristics. quality and size are just two such potential characteristics. I know no name for the specific development in price as dependent on interaction of quality and size.
Jesper Hybel
CC BY-SA 4.0
2024-11-25T11:48:59.063Z
Quality is not a number, so "2x the quality" is a meaningless phrase.
VARulle
CC BY-SA 4.0
2024-11-26T20:52:01.243Z
@VARulle I don't think it is entirely meaningless. For example, one aspect of a car's quality is fuel economy and It would not be meaningless to say one car has twice the fuel economy (e.g in mpg) as another.
smcc
<microeconomics><law>
What is this phenomenon called in economics
logino
# What is this phenomenon called in economics

(Asked by: username_0 on 2024-11-23)

Imagine a car for 15000 dollars and 30000 dollars, lets say that the 30000 car is 2x more expensive but also 2x higher in quality, now imagine 60000 dollar car that is not 2x the quality but only slightly higher in quality than the 30000 dollar car etc. The quality is now rising disproportionately to the price. You are getting less quality for each unit of money. What is this phenomenon called?

**Tags:** microeconomics, law

> **Comments:**
> **username_1**: I don't think it is called anything. Small increases in quality become more difficult so there is a rising marginal cost. Some people are willing to pay substantial sums for small increases in quality (e.g. a small performance benefit is very important for competitive racers). Put the two together and you get the phenomenon you have observed  
> **username_2**: Diminishing marginal utility might fit. It's the idea that as consumers spend more the amount of utility they get from each additional dollar spent falls.  
> **username_3**: cars are heterogenous goods. Price depends on several characteristics. quality and size are just two such potential characteristics. I know no name for the specific development in price as dependent on interaction of quality and size.  
> **username_4**: Quality is not a number, so "2x the quality" is a meaningless phrase.  
> **username_1**: @username_4 I don't think it is entirely meaningless. For example, one aspect of a car's quality is fuel economy and It would not be meaningless to say one car has twice the fuel economy (e.g in mpg) as another.  

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## 1 answers

### Answer by username_5 on 2024-11-23. Score: 2

I would call the $60,000 car a "Veblen good". <https://en.wikipedia.org/wiki/Veblen_good>

The idea is that the consumer is not just buying a product, but is also buying status and a signal of wealth.

> **Comments:**
> **username_1**: Isn't a Veblen good one for which the quantity demanded increases as the price increases? The question doesn't say anything about how the demand for a particular quality car changes with price. For the "$60 000 car" (i.e. the car with the highest quality in the example) to be a Veblen good the quantity demanded for it would have to increase with price. However, I do agree that conspicuous consumption (or the snob effect) might come into it.  

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