The following points highlight the six exceptions to the law of demand. The exceptions are: 1. Things of Prestige Value 2. Inferior or Giffen Goods 3. Complementary Goods 4. Speculative Demand 5. Using Price as an Index of Quality 6. Highly Essential Goods. Exception # 1. Things of Prestige Value: Often rich people use very high-priced goods, not out of [...]
In this article we will discuss about the exceptions to the law of demand with the help of suitable diagrams. First, the economist Veblen (1857-1929) has pointed out that there are some articles of conspicuous consumption like highly expensive models of automobiles, costly ornaments set with jewels like diamond, expensive clothing’s, etc. which, their users think, have aristocratic values because [...]
The following five points highlights the exceptions of the law of demand i.e., (1) Speculative Demand, (2) Snob Appeal, (3) Using Price as an Index of Quality, (4) Giffen Goods and (5) Highly Essential Goods. 1. Speculative Demand: In a speculative market (such as the stock market) a rise in the price of a commodity (such as a share) creates [...]