Section Navigation pg-15

We noted earlier that we can usually rely on the Law of Demand to hold true. However, there are some consumer behaviors that seem to defy the law of demand. We will think of these as exceptions to the law of demand, though as we will see in at the end of Section 5: Market Adjustment, these "exceptions" to the law of demand may be something else entirely.

An exception to the law of demand means the demand curve slopes upward! This is clearly unusual behavior because it means that as the price of a good increases more is demanded. Such behavior is extremely unusual, but we can't ignore the possibility that it exists.

We will consider three possible reasons for upward sloping demand curves. These are: using price as an indicator of quality, the snob effect and giffen goods, though this is not an exhaustive list.

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