It has been observed by many that some luxury brands, such as Herme s and Louis Vuitton, never lower the prices of their products even when the demands are low. On the contrary, people witness that, among similar designs from the luxury brands, the ones are more expensive usually attract more clients. Are these luxury commodities (e.g., Herme s belts, Louis Vuitton shoulder bags, etc.) Giffen goods? Are they infe- rior goods? how can you reconcile this seemingly paradoxical phenomenon? Briefly explain your answer.

4 marks