explain the expectation to the law of demand.
Answers
Answer:
law of demand
Explanation:
- The law of Demand signifies that all other factors are proportional, the Price and Demand for a commodity share an inverse relationship. With the increase in the price of a particular good or service, its demand decreases and vice versa. There are certain exceptions to the law of Demand for specific products
answer provided by Gauthmath
Answer:
1. Veblen Goods
The theory of Veblen goods belongs to the next category of exceptions to the law of Demand. Thorstein Veblen was the one to highlight this concept. Veblen goods are the ones whose demand increases with their Price. They become more valuable with their price rise. These are the goods people consider to be more useful with an increase in Price. Like a high priced gold necklace, it's more desirable to the customer than the one with lower costs. A cell phone model with high cost has more demand in the market. These insights indicate exceptions to the law of Demand with examples.
2. Price Change Exception.
The issue of price change in the market is another exception to the law of Demand. There might be a situation when the Price of a product or service increases and is subjected to future growth. So, the customers may buy more of it to avoid further cost increment. Eventually, there are times when the Price of a product is about to decrease.
3.Necessary Goods.
The Demand for essential goods stays intact even if there’s a price rise. People can’t stop purchasing the products of regular necessities. For example, if the cost of salt increases, consumers won't end affording it. It is a complete opposite to the law of Demand in economics.
4. Luxury Goods.
A significant exception to the law is Demand for luxury goods. In such cases, even if the price increases, the consumer won't stop consumption. Cigarettes and alcohol typically come in this category.
5. Income Change
Income ChangeThe change in income of a consumer or a family also determines the Demand for a particular product. If a family's income increases, they may choose to buy a specific product in more quantity, no matter the Price. Again, if the family's income decreases, they can select to reduce product consumption to an extent. It opposes the law of Demand.