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- Feb 13, 2012
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it kinda does though. "The high price of a luxury good is sometimes interpreted as indicative of the high quality of the good. An example might be higher-priced cars. An expensive car may be thought to be better than a cheaper car. Given this assumption, a price increase may actually make a car more attractive to buyers."
source: my econ textbook
Just an anecdote to add to this. My uncle”s friend owned a struggling restaurant in Switzerland, and a consultant advised him that the food wasn’t the problem. They did some redecorating and nearly doubled the prices, and within months they became a huge success.
I was like 12 when I heard that story but it always stuck with me, about how important perception is