The Law of demand shows the opposite relationship between price and quantity demanded of a commodity. But, such relation does not hold for all the times, consumers, place, environments. It means in actual practice, in many cases law of demand may not operate. At times we find that demand may not vary negatively with the price. Thus, exceptions of the law of demand mean that in some cases the demand for a commodity may change positively or remain constant as the price changes. The following are the major important exceptions of the law of demand.

Giffen Goods

Sir Robert Giffen found through reach on the consumption habit of British workers that, as the price of bread increased, they purchased more bread. This concept looked somewhat adjacent to the law of demand. The main causes of that, when the price of bread increased, it results in the cry off in the purchasing power of poor people and as a result, individuals were forced to reduce the consumption of meat and other more expensive food. In the case of the Nepalese economy, the law of demand does not operate in the case of inferior goods such as low-quality rice and clothes, millet, etc. which are consumed largely by poor people. This happens because of the negative income effect due to the rise in the prices of Giffen goods.

Articles of Distinction

This exception is explained by Prof. Veblen, American Economists. According to him, articles of distinction command more demand when their prices are high. Articles of distinction include jewelry, diamonds, costly carpets, etc. Rich women would like to wear diamond jewelry simply their price is very high. Its high price makes the possession of diamonds more prestigious. When the price of diamonds goes up, their prestige will go up.

Ignorance

Sometimes people buy more of a commodity at a higher price of sheer ignorance. Therefore, irrational consumers generally purchase more at a higher price.

Future Exceptions about Price

It has been observed that when the prices are rising, households bearing that the prices in the future will rise further tend to buy larger quantities of commodities. Similarly, sometimes the consumers may expect a larger fall in the piece of a commodity in the future. If so, they will postpone their purchase even at a lower price today to buy this commodity at a still lower price in the future.

Emergencies

The law of demand may not hold true during emergencies like war, famines, etc. If they fear a shortage of goods people may start buying more goods and building stocks at higher prices. On the other hand, during the depression, they will buy less even at a low price.

Necessary Goods

For necessary goods or compulsory goods such as basic medicine, salt, oil, foods, etc., the law of demand does not hold. It is because the consumers purchase such goods at a more or less constant ratio.

Increase in Income of the Consumers

While dealing with the law of demand, we assume that the income of consumers remains constant. However, if it does not remain constant, the law of demand may not be true. If the income of the consumer increases, the consumer may increase the demand for a good even if the price of the commodity increases.

Change in habit, taste, preference, and weather

If the mentioned elements are changed, the law of demand may not be true. For example, if the taste of the consumer increases toward the commodity then they may demand more units of the commodity even if the price is increased. 

In given cases or circumstances, the law of demand may not apply. Thus, exceptions of the law of demand mean that in some cases the demand for a commodity may change positively or remain constant as the price changes.