CBSE Economics Notes for Class 12 – Exceptions To The Law Of Demand
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EXCEPTIONS TO THE LAW OF DEMAND
- Inferior and Giffen Goods – Giffen goods are a special category of inferior goods in whose case, demand for a commodity falls with a fall in its price. In the case of Giffen goods, when the price falls, their demand may not rise because extra purchasing power is diverted on the purchase of a superior good. For example, if the price of a food grain like Jowar falls, people demand less of it since they prefer eating rice or wheat which are superior food grains.
- Goods Expected To Become Scarce In The Future – Goods which are rising in prices are purchased by households due to the fear of a further rise in its price in the future.
- Goods For Ostentation – Status symbol goods are purchased not because of their intrinsic value, but because of prestige or status. The same good when sold at a lower price faces fall in demand. Hence, these goods do not follow the law of demand.
- Necessities – The law of demand doesn’t operate in case of necessities in life like salt, sugar, milk, food grain, vegetables, etc. In spite of a rise in their prices, their consumption remains unchanged.
- Ignorance – Being ignorant of the prevailing prices, a consumer may buy more of a commodity when its price has in fact gone up.
- Emergency – In the case of an emergency like flood, famine or war, the households do not behave rationally and the law of demand doesn’t operate.
- Miscellaneous – Future changes in prices, change in weather conditions, change in fashion, and loss of faith are some other exceptions where the law of demand doesn’t operate.
The detailed explanation of ‘Law of Demand and its Exceptions with examples is available in CBSE Class 12 Economics classes. For demo, Economics notes, sample papers, CBSE guide, register with Takshila Learning.
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