Exceptions to the Law of Demand

Under certain circumstances, consumers buy more when the price of a commodity rises and less when its price falls. In such cases, the demand curve slopes upwards from left to the right, i.e., it has a positive sloppe. These cirumstances are known as exceptions are known as exceptions to the law of demand. The main exceptions are as follows:

Law of Demand

It is a general experience that demand for a commodity is more at lower price than at a higher price. There is inverse relationship between price and quantity demanded. This inverse price-demand relation is known as the law of demand. Hence, the law of demand shows the direction in which quantity demanded changes with a change in price.

In Marshall's words,"The amount demanded increases with a fall in price, and diminishes with a rise in price."

In the words of Prof. Samuelsion, "Law of demand states that people will buy more at lower prices and buy less at higher price, other things remaining the same."

The phrase 'other things remaining the same' points towards certain important assumptions on which this law is based. These assumptions are:

• No change in income of the consumer;


• No change in the price of related goods;


• No change in the taste, nature and fashion of the consumers;


• No change in climate and season;


• No change in size and composition of the population;


• No exception of further changes in the price of the commodity.

Given these conditions, the law of demand can be explained with the help of table and diagram. It must be remembered that the law of demand is always expressed through market demand schedule and market demand curve.

Kinds of Demand

The following are the types of demand:

• Price Demand

Price demand expresses a relationship between price and quantity demanded. It refers to the various quantities of a commodity that a consumer would purchase at its different prices at a given time, keeping all other things constant. The quantity demanded increases with the fall in price and falls with the rise in price.

• Income Demand

Income demand expresses the relationship between income and demand, keeping all other things constant. It refers to the various quantities of a commodity that would be purchased by a consumer at different level of income. The relationship between the income of the consumer and his demand is positive, i.e. the demand increases with the increase in demand and vice-versa.

• Cross Demand

Cross demand expresses the relationship between the demand for one commodity, say X and the price of the related commodity, say Y. It indicates how much quantity of X commodity will be demanded at different prices of Y commodity, without any change in the price of X commodity.

• Direct Demand

Direct demand refers to the demand for a commodity not for its direct consumption to satisfy a human want directly. For example, the demand for a car is a direct demand and it satisfies the final consumption demand.

• Derived Demand

Derived demand refers to the demand for a commodity not for direct satisfaction but making final product. It is also called indirect demand. Derived demand depends upon direct demand. For example, the demand for a building is a direct demand and the demand for bricks, cement, rod, wood, etc. required to make the building are known as the derived demands.

• Joint Demand

It is also known as complementary demand. Joint demand refers to that demand when two or more commodities are demanded together to satisfy a common want. For preparing tea, we need milk, sugar and tea leaves.

• Composite Demand

Composite demand refers to the demand for one commodity which can be put to several uses. For example, milk can be used for making sweet, tea, butter, etc. Therefore, demand for milk is a composite demand.