1.
Giffen goods or inferior goods-Giffen
Paradox: -Inferior
goods are those goods whose demand does not rise even if their price falls. At
times, the demand decrease, when the price of such gods falls. Sir Robert
Giffen discovered this behaviour in England in relation to inferior goods such
as bread. Therefore inferior goods are named after Giffen and they called
‘Giffen Goods’.
2.
Prestige Goods: There are certain goods and services,
which represent ‘Status’ of ‘Prestige’for the people. Demand for
these commodities is more when the price is more.
3.
Anticipation of changes in price: -If people anticipate a further rise in
price, they may buy more at the existing higher price. Likewise, if people
anticipating a further fall in price, they will not buy more even at the
existing lower prices. They will wait for the price to fall further.
5.
Changes in fashion: The law of demand may not work, if there
is change in fashion. For example, if a product goes out of fashion and its
price falls down, people will not buy more of it even at very low prices.
6.
Promotional activates: - Promotional activities such as
advertising and salesmanship undertaken by seller can make the people buy more
even at high prices.
7.
Changes in quality: if there is a change in the quality of
the product, the law of demand may not apply. For instance, if there is
improvement in quality of the product, some people my demand more even at
higher price.
