Answer to Question #140351 in Economics for arianne

Question

according to the law of demand, consumer demand for a product will decrease if:

Answer 1

Typically, the higher the price, the lower the amount demanded, and vice versa. In some cases, the so-called paradoxical demand is noted - an increase in the value of demand with an increase in price. This is seen in cases of wasteful consumption aimed at displaying wealth (expensive cars, fashionable clothes, jewelry). Goods for which demand behaves in this way are called "Veblen goods".

Another exception is at the opposite end of the spectrum: consumers in very poor countries may start buying fewer low-quality foods, such as rice, if the price falls. This is because consumers will be able to spend the remaining money (after the cheaper purchase) on other, more varied products. Such goods are called "Giffen goods" because the influential economist Alfred Marshall attributed, perhaps erroneously, the honor of discovering this exception to the law of demand to Sir Robert Giffen.