What are the Exceptions to the Law of Demand? CA Foundation Notes

Exceptions to the Law of demand are-

Giffen goods - Giffen items were launched by Sir Robert Giffen. As a result, Giffen goods was born. Consumers perceive these items to be essential. As a result, rather than the inverse relationship predicted by the Law of Demand, price fluctuations induce a straight link between price and amount demanded.

Veblen goods- Thorstein Veblen, an American economist, coined the term Veblen Goods. As a result, the commodities are known as Veblen goods.

Consumers may feel that a higher-priced product equals higher quality, while a lower-priced product equals worse quality. As a result, demand for such commodities, also known as Veblen goods, grows with higher prices and falls with lower prices.

The speculative market of shares - People tend to buy shares of companies whose stock values are rising on the stock market. They do so in the expectation of increasing their profits as the stock market rises. Instead, if prices begin to decrease or continue to fall, they will acquire fewer shares. As a result, this is considered an exception because it contradicts the Law of Demand.

Bandwagon effect- The concept of the bandwagon effect is comparable to that of conspicuous consumption. Consumer demand is significantly influenced by their social class's taste and preferences. For instance, there is a young man named Nityam. Nityam will go to a horse club if his social circle finds them fashionable. If the horse club's admission rates rise, more people in Nityam's social circle will visit the club, which means Nityam will visit the club more frequently.

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