In economics, a luxury good is something that is highly valued by users of its products and services, and that increases in price because of demand, but that is not necessarily unimportant. In fact, in many cases it can be considered a good investment even when the value of the good itself does not increase. For example, the value of gold may fall if there is an outbreak of war, but its price will still be very high because people will still want to buy gold coins, bars or bullion. So in this sense, the value of luxury good does not decrease when there is an increase in its supply.
In economics, a luxury commodity is something that increases in value because of demand, but that is not necessarily unimportant. Take sports cars, for example. The cars themselves are of course luxury items, but they are also items that increase in demand as the country grows increasingly wealthy. As the income of a group of people increases, their demand for the goods and services of the wealthy also increases and so do their salaries, wealth and status. Luxury goods therefore tend to increase in price as the wealth of society as a whole increases.
Again, it would be incorrect to say that demand alone is the sole driver of the increase in price of luxury goods, and the opposite would also be true. Factors such as profits and expansion of the business infrastructure tend to have a positive effect on the price of luxury items. Other factors, such as consumerism and celebrity culture may also have an effect on consumers’ willingness to pay more for luxury items. However, it should be noted that these changes occur more frequently in countries with relatively low-income groups, and that wealthier consumers generally control the trends within luxury goods.