The price of luxury goods is increasing due to factors leading to a shift in supply and demand. Luxury goods experience an increase in demand as the real income of its buyers increases. They differ from basic necessities, so people buy them based on their wants, not needs. Therefore, luxury goods have a relatively high price elasticity of demand; consumers are very responsive to the factors mentioned in the article. The factors are as follows. First, the cost of production, such as the price of raw materials and labor, led to a change in supply. Secondly, the number of buyers influenced demand. Finally, as Sherman stated, customer price expectations and consumer “desirability” are two other factors that caused a direct change in price (Sherman). In terms of supply, the cost of resources is the main factor. The price of the resources and labor needed to produce these luxury goods has increased. As a result, the supply curve shifted to the left (S→S2). This is because when luxury items cost more to produce, suppliers are less likely to produce them. This leads to a decline in the number of items produced. With a shift in the supply curve, the equilibrium changes from E1 to E2. In Figure 1 the equilibrium price increases while quantity decreases. This indicates that the price of this luxury good has increased (P1→P2) due to an increase in production costs, especially resources and labor. Secondly, an increase in the number of richer people has influenced demand. If there were more buyers who can afford the product, it would mean a bigger market, so the demand will increase. Similarly, when real income increases and people have greater purchasing power, the demand curve shifts to the right (D→D2). Furthermore, the equilibrium shifts from E1 to E2. T...... half of the document ......people's economic situation is at risk. To be evaluated, there are some theoretical drawbacks that make it difficult to develop an effective solution. Economists suggest that there is something called the Veblen good. However, in reality, there is no clear distinction between Veblen and other luxury goods. It depends on the preferences of the individual, rather than on how the good is classified. Therefore it is evident that theories differ from reality. Furthermore, every economic theory is based on the Ceteris Paribus assumption that all other aspects should be kept equal when examining the effect of a factor. But in reality, elements such as customer anticipation towards the good also have a direct influence. Overall, this solution of using cheaper resources could be harmful to some stakeholders and is not very realistic, considering the gap between theory and reality.