In this article, you will discover exceptions to the law of demand. So let’s see. These exceptions are opposite to the law of demand.
Read more – 5 Types of Demand
Exceptions to the Law of Demand
Giffen’s Paradox:
Inferior goods are those goods whose demand does not rise even the goods price falls. At times, demand decreases when the price of such things falls.
Sir Robert Giffen observed this behavior in his country in regard to bread. he reported that, when the price of bread dropped, people did not purchase more because of an expansion in their real income or purchasing power.
They preferred to buy superior goods like meat. This is known as the Giffen paradox.
Prestige Goods:
Costly goods like diamonds, gold, etc. are status signs. so rich people buy more of it, even when their prices are high.
Speculation:
The demand does not hold true when people expect prices to increase still further. In this case, although the prices have risen today, consumers will demand more in anticipation of further increases in price.
For example, prices of oil, sugar, etc. tend to increase before Holi, so people go buying more at a high price as they expect that prices may rise during Diwali.
Price illusion:
The fourth exception to the law of demand is price illusion. Some consumers have a misconception that high-priced goods are of better quality. Therefore, the demand for such goods tends to increase with a rise in their prices.
For example, branded products that are expensive are demanded even at a high price.
Ignorance:
Sometimes, due to ignorance people buy more of a commodity at a high price.
This can happen when the consumer is innocent about the price of that commodity at another place.
Habitual goods:
The last exception to the law of demand is habitual goods. Due to the habit of consumption, specific goods like tea are bought in required quantities even at a higher price.
So, friends, these were the exception to the law of demand and I hope you have understood them clearly. But still, if you see any need in this post, then please give your view in the comment box and help us to improve that deficiency, thanks.
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