Q. 6. Answer in detail : 1) State and explain the law of demand wil exceptions. 2) Explain in detail the determinants of demand
Answers
There are two exceptions to the Law of Demand. Giffen and Veblen goods are exceptions to the Law of Demand. ... The Law of Demand states that the quantity demanded for a good or service rises as the price falls, ceteris paribus (or with all other things being equal).
What are the Exceptions to the Law of Demand?
In an economy, the chief determinants of the market conditions are demand and supply factors. In the competitive markets, the price range of the product keeps fluctuating as long as Demand and supply aren't equalled. This situation is equilibrium. There are specific exceptions to the law of Demand that we will explore now. In economics, the law of Demand is true to the lines for most cases. However, some significant exceptions are there.
2.Explain in detail the determinants of demand ?
Answer
Demand function shows how demand is related to its various determinants.
1) Own price of the commodity: Other things remaining constant, with the rise in own price of the commodity, its demand contracts and with the fall in price, the demand expands.
2) Income of the consumer: The demand for normal goods increases with the rise in consumer's income and vice-versa. On the other hand, the demand for inferior goods decreases with the rise in income of the consumer and vice-versa.
3) Tastes and preferences: Other things being equal, demand for those goods increases fr which consumers develop a strong tastes and preferences. On the contrary, if tastes and preferences towards a product fading, its demand will decrease.