Question

What are the exceptions to law of demand?

Answer 1

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LIMITATION OR EXCEPTION TO THE LAW OF DEMAND.
An exceptional demand curve is one which has a positive slope. In other words, it slopes upward from the left to the right showing that the quantity bought would be more at higher prices due to the following factors:
1. Articles of osentation [expensive article with snob appeal such as gold, diamond, luxurious cars attract higher demand at higher prices].
2. Expectation of future rise and fall in prices.
3. Giffen goods [goods whose demand varies inversely with the changes in income].

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Answer 2

Explanation:

Price effect is the composite effect of ‘income effect’ and ‘substitution effect’. Giffen goods (most inferior goods) are those inferior goods for which ‘income effect’ of change in price is negative and is greater than the substitution effect.

Therefore, the demand of Giffen goods increases with rise in price and decreases with fall in their price.