With the economy booming, there is an increase in the gap between the wealthy and the poor. People are constantly searching for things that will satisfy their needs: new clothes, shoes, watches, cars, iphones, you name it. This is the idea of scarcity, where people have unlimited wants and needs but have limited resources. “The rich people have different preferences than poor people do” (Wheelan). With all the money in the hands of the wealthy, luxury goods become more and more popular on the market. It is not surprising that department stores have skyrocketing prices for luxury goods increasing by the day.
The fluctuating prices in the fashion industry are making people complain about the rapid increase in digits on the price tag of designer goods. With constant competition for the high quality and luxury brands, corporations are increasing the prices of their products constantly. There is a concept where people believe that the more expensive a product is, the better it must be. This idea leads the fashion industry to increase their retail price further making their name brands something untouchable to the poor. “Wealth inequality is greater than income inequality” (DeSilver). Even when the less wealthy work to purchase their desires, their starting point compared to the wealthy is still incomparable. Scarcity of money makes the less wealthy consumers choose between what they can purchase, and what they cannot afford. If they choose designer brands, there has to be a tradeoff between their thirst for luxury brands, or their need to survive. Here, opportunity cost would be what the poor lose in order to buy what they desire: in this case, their money intended for more useful purposes would be their opportunity cost. As an example, If they did use their hard earned money to buy designer brands, they may not be able to afford eating better meals. The wealthy however, due to their abundance in resources, would not be dealing with this kind of opportunity cost.
Whenever the consumers set their eye on a designer good, they go through cost benefit analysis where they weigh the differences between the benefits and the costs of their purchase. If they believe that they will gain some positive benefits out of their purchase, they will want to buy the product. However, if they find that the benefits do not overweigh its cost, they will be less likely to purchase the product. This is a reason why some people choose to buy designer brands while others do not.
With a majority of consumers being the rich who control a large percentage of the wealth in the country, these high end luxury goods are becoming unreachable to the normal citizens. This has left many people complaining about their inability to afford such luxury goods. If anything is designer and limited edition, thousands of people glue their eyes to their screens, making sure that they do not miss the product release time, even to the second. In many cases, the more limited it is and expensive the product is, the more people notice the product. Things are sold out in a matter of minutes and lucky buyers often resell their products with a price that can go up to ten times the price they had purchased the item for. In many ways, the fashion industry is controlled by the wealthy. Only those who can play with their cash are able to play this game of fashion. Looking through the perspective of the individual fashion luxury brands, they are only trying to maintain their status and not degrade their product compared to their competitors. However, when looking at the Fashion industry as a whole, these corporations are indeed being greedy as they raise their revenue drastically altogether.
Works Cited
DeSilver, Drew. “5 Facts about Economic Inequality.” Pew Research Center, 7 Jan.
2014,www.pewresearch.org/fact-tank/2014/01/07/5-facts-about-economic-inequality/.
Wheelan, Charles J., and Burton G. Malkiel. Naked economics: Undressing the Dismal
Science. New York, W.W. Norton & Company, 2012.Wheelan, Charles J., and
Burton G. Malkiel.
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