Explain using practical examples any two exceptions to the low of demand
1. Giffen goods: A Giffen good is a type of product that violates the law of demand by having an upward-sloping demand curve. This means that as the price of the good increases, the quantity demanded also increases. This phenomenon is typically observed in cases where the good is essential for survival and there are limited substitutes available. An example of a Giffen good is food staples in developing countries. When the price of these goods increases, consumers may not have the option to cut back on consumption because they need them to survive, leading to an increase in quantity demanded despite the higher price.
2. Veblen goods: Veblen goods are another exception to the law of demand as they have a positive relationship between price and quantity demanded. This means that as the price of a Veblen good increases, the demand for it also increases because the higher price is seen as a signal of prestige and status. Luxury items like designer handbags, high-end cars, and expensive jewelry are examples of Veblen goods. Consumers may be willing to pay more for these goods because of their symbolic value, rather than their utility, which leads to an increase in demand as the price rises.