Which among the following is/are exceptions to the law of demand? 1) C
1) Conspicuous goods
2) Giffen goods
3) Conspicuous necessities.
4) Speculative goods
A. Only 1, 4
B. Only 1, 2
C. Only 1, 3
D. All of these
Right Answer is: D
According to the law of demand, Quantity demanded and the price is inversely proportional to each. But some goods are exceptions to the law of demand.
1) Conspicuous goods: Higher the price of the goods people tends to buy more of these goods. As this type of goods is associated with the prestige value. Ex: Diamond, gold
2) Giffen goods: The goods which exhibit direct price-demand relationship are known as Giffen goods. Ex: Bajra, Low quality of rice
3) Conspicuous necessities: The goods due to their continuous usage have become necessities of life. Ex: in spite of the fact that prices of TV increase its demand never falls.
4) Speculative goods: These are stock market goods. More will be demanded when the value of stocks rise, and less will be demanded when the price falls.