Question

Explain 5 conditions when the law of demand do not work ?

Answer 1

THERE ARE MANY CONDITIONS WHEN LAW OF DEMAND DOES'NT WORK.FOLLOWING ARE FIVE CONDITIONS

1. HABITUAL GOODS-Some people have habit of consuming goods like tobacco, cigarettes etc. so the people who are habituated they buy that commodity at higher rate also. Which is against the law.

2.IGNORANCE-Sometimes people do not have prefect knowledge of particular commodity,so they are ignored,due to which seller priced the commodity at higher price which the commodity has lower price.which is against the law.

3.PRICE ILLUSIONS- Some consumer have illusions that higher price goods are of the good quality,by which demand of these goods are high even at higher prices .

4.PRETIGOUS GOODS-Goods having ''SNOB APPEAL" like diamonds, cars, high priced phones etc.consumed by rich classes people as their status symbol. Are consumed even at the higher rates

5.DEMONSTRATION EFFECTS-The mindset of lower income group is to imitate like the consumption of higher income group due to which they buy lower priced goods at higher rates.