AS PRICE INCREASES WHY WOULD QUANTITY DEMAND ALSO INCREASE ?

SHOULDNT QUANTITY DEMAND INCREASE WHEN PRICE DECREASES ?

When the price of a product increases, it is typically expected that the quantity demanded will decrease. This is known as the law of demand, which states that as the price of a product rises, the quantity demanded for that product will decrease.

However, there are some situations in which an increase in price can lead to an increase in quantity demanded. This phenomenon is known as the "pecuniary effect" or "income effect" and is typically observed for certain types of goods, such as luxury goods or Veblen goods.

The income effect occurs when a price increase for a product causes a decrease in purchasing power for consumers. As a result, consumers may choose to allocate a larger proportion of their income to the higher-priced product, reducing the amount available for other goods and services. In this case, the quantity demanded for the higher-priced product can actually increase.

Additionally, there may be situations where an increase in price is perceived by consumers as an indication of higher quality or exclusivity. This can create a higher demand for the product, particularly among consumers who value these attributes. Luxury brands often employ this strategy to create a perception of prestige and exclusiveness, which can result in increased demand as the price increases.

Overall, while the general expectation is that quantity demanded will decrease as price increases, there are scenarios in which an increase in price can actually lead to an increase in quantity demanded, often due to income effects or perceived quality/exclusivity.