Explain, using any two practical examples exception for law of demand
1. Luxury goods: In some cases, the law of demand may not hold true for luxury goods. For example, a high-end designer handbag may see an increase in demand as the price increases. This is because the high price tag may make the handbag more desirable to certain consumers who view it as a status symbol. In this case, the demand curve for the handbag may slope upwards, defying the traditional law of demand.
2. Giffen goods: Giffen goods are a unique type of product that goes against the law of demand. These are goods that see an increase in demand as their price increases, and a decrease in demand as their price decreases. This phenomenon is rare, but one example of a Giffen good is inferior staple food items, such as rice or potatoes, in developing countries. As the price of these staple goods rises, low-income consumers may be forced to spend more on them and cut back on other higher-quality food items. In this case, the demand for the staple goods may increase despite the higher price, contradicting the traditional law of demand.