Question

Which of the following is an exception to the law of demand?

Options

• Veblen Effect

• Taste and preferences

• Change in numbers of consumers

• Price of related goods

Answer 1

Veblen Effect

Explanation:

The Veblen Effect is a notable exception to the law of demand since it applies to high-status luxury commodities (such as designer watches or diamonds), where a price increase increases the product’s desirability as a status symbol. This results in a straightforward, upward-sloping demand curve.