Exceptions To The Law Of Demand for CBSE Economics Class 12
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.
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