Published by: sadikshya
Published date: 28 Jun 2021
The limitation of the law of demand is as follows.
When the price falls of certain goods, their demand does not increase. This was analyzed by gaffer for the first time these goods are count as gaffer goods or inferior goods these commodities have a negative income effect.
Consumer’s out of ignorance consider low price goods as inferior and demand less. When the price of the same commodity is high it attracted more customers, their behaviours are the result of their ignorance about the quantity of the goods. This trend goes against the law of demand.
Necessities have a positive price effect. Despite the higher price of bread, salt, rice, and cloth. A common man has to purchase this commodity this is the necessities of life or necessary for survival.
If a price is expected to rise in the future, present demand will go up with a rising price on the other hand if the price is expected to fall in the future, lesser commodities will be demand at present to reduce the price.
A condition during natural calamities such as drought, famine, earthquake, and wartime becomes abnormal. This law doesn’t operate in such a condition.
In abnormal weather conditions, demand rises with increase price due to the passers of unnamable demand. Demand for seasonal goods rises if the price rises.
This law does not apply to the collection of rare goods such as old quoin, old stamps, and old pictures because of the intensity for additional in its increase with a collection.