LAW OF DEMAND

From the above discussion it is clear that an inverse relationship exists between the price
and the quantity demanded when other factors are held constant. This inverse relationship
between price and quantity demanded is so common that economists have called it the law
of demand, the law of demand states the inverse relationship between price and quantity
demanded. The law says Other things remaining the same, as the price of a commodity
falls, demanded quantity rises and as the price rises, demanded quantity falls.

EXCEPTIONS TO THE LAW OF DEMAND:

1. When a serious shortage is feared, people get panicky and by more even though the
price is rising.
2. When the good in question is a luxury item. In case the use of a commodity confers
distinction, the wealthy people will buy more when the price rises, to be included among
the few distinguished personages. Conversely, people tend to cut their purchases, if they
believe such commodity tend to be inferior or similar but more expansive/prestigious
product /brand is up coming in the market.
3. Sometimes people buy more at a higher price in sheer ignorance.
4. If the price of necessity of life goes up, the consumer has to readjust his whole
expenditure. He may cut down his expenses on other food articles and in order to make up,
more may have to be spent on this particular good. Thus, more of this commodity will be
purchased in spite of its high price.
5. When the good whose demand is being studied goes out of fashion. With the popularity
of VCD player in Bangladesh, the demand for VCR may very well fall even if VCR has
become cheaper. Similarly, during off-seasons, goods are sold at reduced prices and yet
demand is low.