Goods as Status Symbol

Goods that serve as status symbols, such as costly diamonds or super luxury cars, are purchases by the rich and affluent persons to showcase their wealth and status. The person is buying such goods to distinguish himself or herself from the ordinary rich or middle class people. If price of such goods falls, that person will not get the feeling of that distinction or status any more. So his demand for that good will become low. No doubt, many other people may now buy that good, and thus overall market demand may increase. But from individual’s demand point of view, a fall in price causes demand to fall and thus it constitutes an exception to law of demand.