02-25-2015, 09:51 AM
Exceptions to the Law of Demand.
1. Prestige/Conspicuous Goods: More expensive goods are highly demanded by the richer persons to build prestige in the society.
2. Giffen Goods: Those goods which are inferior and which occupy a substantial place in consumer's budget are called "giffen goods". The price effect of Giffen goods is positive and income effect is negative. . The demand for giffen goods increases with the rise in its price and decreases with the fall in its price examples of such goods are coarse grain, course cotton cloth etc.
3. Possible rise in future prices: If there is a possibility of rise in price of a particular commodity in future, more quantity of it is purchased by buyers. Like in share market.
4. Change in Fashion : If a particular commodity is in fashion. More quantity of it is demanded even at increased price and vice-versa.
5. Necessary goods: Demand of necessary goods are not affected by prices. Like medicine, salt, match box etc.
6. Emergency: In emergency situations like war, riot etc. people demand more quantity of wheat, vegetables etc. even at higher prices.
7. Ignorance: Generally consumer thinks that expensive commodities are of better quality. So, they choose those commodities which have higher prices. Like cosmetic goods.
8. Speculation
1. Prestige/Conspicuous Goods: More expensive goods are highly demanded by the richer persons to build prestige in the society.
2. Giffen Goods: Those goods which are inferior and which occupy a substantial place in consumer's budget are called "giffen goods". The price effect of Giffen goods is positive and income effect is negative. . The demand for giffen goods increases with the rise in its price and decreases with the fall in its price examples of such goods are coarse grain, course cotton cloth etc.
3. Possible rise in future prices: If there is a possibility of rise in price of a particular commodity in future, more quantity of it is purchased by buyers. Like in share market.
4. Change in Fashion : If a particular commodity is in fashion. More quantity of it is demanded even at increased price and vice-versa.
5. Necessary goods: Demand of necessary goods are not affected by prices. Like medicine, salt, match box etc.
6. Emergency: In emergency situations like war, riot etc. people demand more quantity of wheat, vegetables etc. even at higher prices.
7. Ignorance: Generally consumer thinks that expensive commodities are of better quality. So, they choose those commodities which have higher prices. Like cosmetic goods.
8. Speculation