Exceptions of the Law of Demand

The situation when the law of demand doesnot hold, it is the case of exceptions of the law of demand. Some of the exceptions of the law of demand are :

I ) Expectations Regarding Future Price (Pe) :

When the consumer expect the continuous rise In the price of a durable goods in near future, they buy  more of it at present time then the current demand for the commodity increases. In the similar manner, when the consumer expect a further fall in price in near future, they postpone their purchase, which results the decrease in demand at current time.

Il) Prosperity and Depression:

At the time of prosperity people buy more goods even the price goes up. It is due to the increase in purchasing power of the consumer During the period of depression people buy less goods even when the price of commodity falls . This is because of the fall in purchasing capacity of the consumer.

Ill) Giften Goods:

Giffen goods are those goods which are demanded more at a higher price and less at the lower price. In case of giffen goods there is a positive relationship between demand for giften goods an its price. Mostly these good. are consumed by the poor households .

IV) Ignorance :

Due to the ignorance of the consumer regarding competitive price of the commodity , he purchase more of the even at a higher price because high price commodity are generally considered as superior in quality.

V) Change in Fashion Habit & Preference :

Due to the change in fashion habit and preference , consumer demanded more quantity even at a higher price .

VI) Prestigious Goods:

In case of prestigious goods like gold , precious stones, pantings, the consumer demands more of it even at a higherprice .

Chapter 2 Part 5