Mention any two exceptions of the law of Demand.
Dear student,
Following are the exceptions of the demand law:
1) Giffen goods: Giffen goods are the most inferior goods.There is a positive relation between the price of giffen good and the demand for it.When the price for giffen goods increases,consumer purchases more quantity of these goods,as now he/she is left with less income to spend on other superior goods(as superior goods will be more expensive as compared to the giffen goods).
This exception was pointed out by Sir Robert giffen, who observed that when the price of bread increased in 19th century, the low paid british workers purchased more of bread instead of less of it.As bread was cheaper as compared to its substitutes fish,muttons etc.So as to maintain the daily food intake,they increased the consumption of bread on increased price.
2)Conspicuous or status symbol goods:Law of demand doesn't apply on status symbol goods which are purchased by highly rich people.The demand for these goods increases as the price increases.For example:Diamonds,Luxurious cars,expensive mobile phones etc.
3)Ignorance:Some consumers believe that high priced goods are better in quality.So in this case the law of demand doesn't apply,as the consumer increases demand for the goods when the price of the goods increases.
Regards.
Following are the exceptions of the demand law:
1) Giffen goods: Giffen goods are the most inferior goods.There is a positive relation between the price of giffen good and the demand for it.When the price for giffen goods increases,consumer purchases more quantity of these goods,as now he/she is left with less income to spend on other superior goods(as superior goods will be more expensive as compared to the giffen goods).
This exception was pointed out by Sir Robert giffen, who observed that when the price of bread increased in 19th century, the low paid british workers purchased more of bread instead of less of it.As bread was cheaper as compared to its substitutes fish,muttons etc.So as to maintain the daily food intake,they increased the consumption of bread on increased price.
2)Conspicuous or status symbol goods:Law of demand doesn't apply on status symbol goods which are purchased by highly rich people.The demand for these goods increases as the price increases.For example:Diamonds,Luxurious cars,expensive mobile phones etc.
3)Ignorance:Some consumers believe that high priced goods are better in quality.So in this case the law of demand doesn't apply,as the consumer increases demand for the goods when the price of the goods increases.
Regards.