State with reason. Whether you ‘agree’ or ‘disagree’ with the following statement:
There are no exceptions to the law of Demand.
Ans. No, I do not agree with this statement.
It is believed that the Law of DMU is not applicable in the following cases. But, strictly speaking. The assumption of the law of DMU is not followed in these exceptions.
1.Hobbies: - it is believed that in the case of certain hobbies such as stamp collection, antique (historic) collection, etc. MU goes on increasing with acquisition of additional units. But here the person does not collect the same types of stamps, and therefore, the assumption of homogeneity is not fulfilled.
2. Drunkards/Drug addicts: It is believed that every dose of drug or liquor increases utility to the consumer. But in the case of drunkard or drug addict, there is no rational behaviour is assumed.
3. Miser: -A miser’s greed increases with the increases in the stock of money. But here miser displays an abnormal behaviour in hoarding wealth. Therefore, the assumption of rational behaviour does not apply.
4. Music and poetry: -It is believed that more poetry and music give greater satisfaction.