Skip to content

COMMERCEIETS

STUDY TO ENLIGHTEN YOURSELF

  • BCOM GNDU NOTES – SCORE BEST IN YOUR EXAMS!!!
  • MANAGEMENT ACCOUNTING
  • BUSINESS ORGANISATION
  • DIRECT TAX LAWS
  • INTERNATIONAL BUSINESS
  • INDUSTRIAL AND LABOUR LAWS
  • OPERATIONS RESEARCH
  • RISK MANAGEMENT AND INSURANCE
  • BUSINESS STATISTICS
  • PARTNERSHIP ACCOUNTS
  • CORPORATE ACCOUNTING
  • COMMERCIAL LAW
  • MANAGERIAL ECONOMICS
  • BUSINESS MANAGEMENT
  • 11 ACCOUNTANCY
  • GOODS AND SERVICE TAX
  • MICRO ECONOMICS
  • 12 ACCOUNTANCY
  • KEY DIFFERENCES
  • COST ACCOUNTING
  • FINANCIAL ACCOUNTING
  • FINANCIAL MANAGEMENT
  • Toggle search form

EXCEPTIONS OF LAW OF DEMAND

Posted on July 28, 2019 By commerceiets No Comments on EXCEPTIONS OF LAW OF DEMAND

Table of Contents

  • EXCEPTIONS OF LAW OF DEMAND
          • EXCEPTIONS OF LAW OF DEMAND
        • VEBLEN GOODS OR ARTICLES OF DISTINCTION
        • INFERIOR GOODS
        • IGNORANCE OF CONSUMER
        • ABNORMAL CIRCUMSTANCES
        • GIFFEN GOODS

EXCEPTIONS OF LAW OF DEMAND

Demand is that specific quantity of a commodity which the consumer purchases at a specific price during a specified time period.

ACCORDING TO FERGUSON

“Demand refers to the quantities of commodity that the consumers are able and willing to purchase at each possible price during a period of time, other things being equal.”

EXCEPTIONS OF LAW OF DEMAND

Exceptions of law of demand state the areas where law of demand does not apply. The law of demand fails when any of its assumption does not gets fulfilled. The main exceptions of law of demand are as follows:

EXCEPTIONS OF LAW OF DEMAND
EXCEPTIONS OF LAW OF DEMAND

VEBLEN GOODS OR ARTICLES OF DISTINCTION

Such commodities which are considered as symbol of status and known as Articles of Distinction. This exception was first explained by the American Economist Veblen. That is why; these articles or goods are known as Veblen goods. Such commodities are generally consumed by the rich. The higher the price of these goods, the more will be their demand and vice versa. This makes the demand curve slopes upward.

INFERIOR GOODS

The law of demand applies only to the normal goods. This law does not apply to the inferior goods. Inferior goods are those goods which are relatively cheap in nature. If the prices of these goods rise, their demand also rises. And if the price of these goods decreases, their demand falls.

IGNORANCE OF CONSUMER

Many times, the consumer thinks that the cheap commodity is inferior commodity. Hence the consumers purchase less if its price is low. On the contrary, if the price rises, the consumer takes it as superior in quality and purchases more of it. This makes the demand curve slopes upward and law of demand fails.

ABNORMAL CIRCUMSTANCES

The law of demand does not apply in abnormal circumstances like war, floods, earthquake etc. In such circumstances, the demand for necessary commodities rises even though their price is higher. On the other hand, the demand for other than necessary commodities falls even though their price is low.

GIFFEN GOODS

The concept of these goods was given by Sir Robert Giffen. At his name, these goods are known as Giffen Goods. Giffen goods are highly inferior goods, showing a very high negative income effect. As a result, when price of such commodities falls, their demand also falls, even when they happen to be relatively cheaper than other goods. This is popularly known as ‘Giffen Paradox’.    

In short, it can be said that the law of demand applies only when all its assumption holds good. Otherwise it fails.

Also StudyAlso StudyAlso StudyAlso Study
Theory of DemandLaw of DemandDemand FunctionExceptions of law of demand
Elasticity of demandChange in demandPrice elasticity of demandLaw of demand Vs Elasticity of demand
Factors affecting price elasticity of demandProduction functionShort run vs long run production functionLaw of variable proportions
Types of demandManagerial economicsCharacteristics of managerial economicsScope of managerial economics
Utility analysisLaw of diminishing marginal utilityLaw of equi marginal utilityConsumers Equilibrium
Indifference curve analysisConsumer equilibrium using indifference curve analysisRelationship between TP, AP and MPLaw of increasing returns
Law of diminishing returnsLaw of constant returnsReturns to ScaleEconomies and diseconomies of scale
Concept of costsRelationship between AC and MCTraditional theory of costsModern theory of costs
Explicit vs Implicit costsRevenuePerfect competitionMonopoly 
Price discriminationDifference between perfect competition and monopolyPerfect Vs Monopolistic competitionMonopoly and monopolistic competition
Product differentiation strategyMonopolistic competitionNational Income in IndiaMeasurement of national income in India
Consumption functionKeynes Psychological law of consumption
CONNECT ON LINKEDIN
Exceptions of Law of demand
Exceptions of Law of demand
MICRO ECONOMICS Tags:DEMAND, DEMAND FUNCTION, LAW OF DEMAND

Post navigation

Previous Post: LAW OF DEMAND
Next Post: CAPITAL EXPENDITURE

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

  • 11 ACCOUNTANCY
  • 12 ACCOUNTANCY
  • BCOM GNDU NOTES
  • BUSINESS MANAGEMENT
  • BUSINESS ORGANISATION
  • BUSINESS STATISTICS
  • COMMERCIAL LAW
  • CORPORATE ACCOUNTING
  • CORPORATE OR COMPANY LAW
  • COST ACCOUNTING
  • DIRECT TAX LAWS
  • FINANCIAL ACCOUNTING
  • FINANCIAL MANAGEMENT
  • FINANCIAL MARKET OPERATIONS
  • GOODS AND SERVICE TAX
  • INDUSTRIAL AND LABOUR LAWS
  • INTERNATIONAL BUSINESS
  • KEY DIFFERENCES
  • MANAGEMENT ACCOUNTING
  • MANAGERIAL ECONOMICS
  • MICRO ECONOMICS
  • OPERATIONS RESEARCH
  • PARTNERSHIP ACCOUNTS
  • RISK MANAGEMENT AND INSURANCE

Copyright © 2023 COMMERCEIETS.

Powered by PressBook WordPress theme