The correct answer is C. Markets where sellers rely on their customer’s high propensity to consume a prestigious commodity.
In a perfect competitive market, firms are price-takers, meaning that they have no control over the price of their products. As a result, they cannot charge a price above the prevailing market price.
In markets where firms want to gain popularity of the products having high cross elasticity of their demand, firms may charge a price below the prevailing market price in order to attract more customers. This is because the demand for these products is very sensitive to price changes.
In markets where selling firms have entered into the stages of maturity and saturation, firms may charge a price above the prevailing market price in order to maintain their profits. This is because the demand for these products is relatively inelastic, meaning that a change in price will not have a significant impact on demand.
However, in markets where sellers rely on their customer’s high propensity to consume a prestigious commodity, firms may charge a price above the prevailing market price even if the demand for these products is relatively elastic. This is because consumers of prestigious commodities are willing to pay a premium for products that they perceive as being of high quality or status.
For example, a luxury car company may charge a price above the prevailing market price for its cars even though there are many other cars available at a lower price. This is because the company knows that there are consumers who are willing to pay a premium for a luxury car.
In conclusion, the correct answer is C. Markets where sellers rely on their customer’s high propensity to consume a prestigious commodity.