Posted by Anjali Kaur on Jul 25, 2020
Exceptions to the law of demand

The law of demand: Exceptions

The exceptions to the law of demand mean the goods or conditions where the law of demand is not applicable or does not operate. The law of demand states an inverse relationship between price and quantity demanded of a good, keeping other things constant (Ceteris paribus). Let’s learn those exceptions of the law of demand.

Giffen Goods

These are those goods, where higher prices cause an increase in demand, thereby reversing the law of demand. The demand increases due to the income effect of the higher prices greater than the substitution effect. For example, if you are very poor and the prices of your basic foodstuff like bread increases, then you cannot afford to buy more expensive alternative food. Therefore, you end up buying more bread (which is already costly) because it is the only thing you can afford.

Veblen goods or Article of distinction

The law of demand is not applicable on expensive items like diamond, gold jewelry. These commodities will be demanded even if prices have gone up very high. (Nobody stops marrying because that diamond ring was costly)


When a consumer is not aware of the competitive prices of a commodity, he may purchase more of it even at higher prices, without even knowing it. So, ignorance or not doing a proper market search makes the law of demand inapplicable.


The law of demand does not operate on necessities. For example, medicines, salt, etc. Minimum quantities of these necessities goods have to be consumed irrespective of the price level. (You don’t apply the law, in case you are very sick)

Other exceptions

Other exceptions include climatic changes, emergencies like drought, earthquakes, etc. The law of demand does not operate in such circumstances. As people think more about living, then about the price they have to pay for survival.

Photo by Jan Genge on Unsplash

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