Are luxury cars Veblen goods?

  1. A large industrialized country has recently devalued its currency in an attempt to correct a persistent trade deficit. Which of the following domestic industries is most likely to benefit from the devaluation?
    A. Luxury cars.
    B. Branded prescription drugs.
    C. Restaurants and live entertainment venues.

A is correct. A devaluation of the domestic currency means domestic producers are cutting the price faced by their foreign customers. The impact on their unit sales and their revenue depends on the elasticity of demand. Expensive luxury goods exhibit high price elasticity. Hence, luxury car producers are likely to experience a sharp increase in sales and revenue due to the devaluation.

I’m really confused with the explanation because I thought the demand of luxury cars would decrease as its price became cheaper to foreigners (similar to what I’ve learnt from the effects of Veblen goods, which is demand decreases as price decreases).

Can anyone help me with this question please T.T

I don’t think that luxury cars are the best example necessarily of “Veblen goods.” In general, luxury cars are already very expensive and are a more discretionary item, so if the price continues to increase and increase the demand is not going to keep increasing. (Also, I don’t think or remember the CFA readings ever giving examples of Veblen or Giffen goods, just that they defied the typical law of price and demand). The below is from their website;

Veblen goods are highly valued high-priced “status” goods; consumers may tend to buy more of a good if its price rises.

I think this question is more asking about a combination of do you know how the devaluation of currency works (domestic currency makes domestic goods cheaper for foreigners) AND price elasticity of demand for different types of products (because cars are an expensive spending item and similar to appliances, they are more discretionary in nature so when prices decreases demand will increase).