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 [...]
The following article will guide you about how do income and substitution effects help to explain law of demand. The utility approach helps explain the law of demand. In fact, the demand curve for a normal good is downward sloping due to the law of diminishing marginal utility. Alfred Marshall and other members of the English neo-classical school developed the [...]
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 [...]