Question

Explain the law of demand with its exceptions.

Answer 1

Exceptions to the Law of Demand. Giffen Goods: Giffen goods are the inferior goods whose demandincreases with the increase in itsprices. ... Veblen Goods: Anotherexception to the law of demand is given by the economist Thorstein Veblen, who proposed the concept of “Conspicuous Consumption.

Answer 2

The law of demand explains negative relationship between the price and quantity demanded of a commodity, assuming others factors affecting demand to be constant.

According to Dr. Marshall,
"Law of Demand states that amount demanded increases with a fall in price and diminishes when price increases."

Exceptions to Law of Demand

1. Giffen Goods: These are highly inferior goods in case of which price effect is positive.

2. Ignorance: Sometimes, out of ignorance, a consumer buys more of a commodity when its price actually has gone up and may buy less even if its price has in fact gone down.

3. Goods expected to become costly: If prices are expected to rise in future, then people may buy more even if the present prices are high. Similarly, if prices are expected to fall, people may not demand even if the current prices are low.

4. Necessities: The law is not applicable in case of basic necessities e.g., medicines, textbooks, salt, cooking gas etc. Minimum quantities of these goods have to be consumed whatever maybe price, (high or low).

5. Other exceptions: Changes