The exceptions to the Law of Demand include:
1. Giffen Goods: These are inferior goods where an increase in price leads to an increase in demand. This happens because the income effect (reduction in real purchasing power) outweighs the substitution effect. For instance, in poor regions, a rise in the price of a staple food like bread may increase its demand, as people cannot afford more expensive alternatives.
2. Prestige or Veblen Goods: These are luxury iterms, such as designer clothing, high-end cars, or branded watches. For such goods, a higher price increases their perceived value or status, leading to higher demand.
3. Necessities: Essential goods like life-saving medicines or basic food items do not follow the law of demand strictly. Their demand remains constant or even increases irrespective of price changes, as people cannot avoid consuming them.
4. Speculative Reasons: When people expect prices to rise in the future, they may purchase more of a product even it its price is currently high. This behavior is commonly observed in the housing or stock market.
5. Addictive Goods: Products like cigarettes, alcohol, or drugs are exceptions because their demand remains high even when prices rese, due to addiction or habitual use.
