Explain, with reasons, whether you Agree or Disagree with the following statement
There are no exceptions to the Law of Demand.
Solution
Disagree. The law of demand has certain exceptions. Some of such exceptions are listed below:
1. Giffen goods: These are extremely inferior goods. With a fall in price of the Giffen goods, their demand falls.
2. Emergency situations: In case of emergency situations such as war, curfew, natural calamities etc consumers purchase the commodities even at a higher price.
3. Articles of distinction: Articles such as diamonds, jewellery, etc. are accorded high prestige and status as these are very costly. Such articles enjoy a high demand because of their high price. Consequently, the demand for such goods share a positive relationship with price.
