Give circumstances where the demand for commodity may not fall despite a rise in cost

Give circumstances where the demand for commodity may not fall despite a rise in cost

This leads to abnormal demand curve since a rise in cost of a commodity will lead to increase in price of it even though not always

The circumstances here include

  • When the commodity in question is a good of ostentation
  • Price expectation
  • Ignorance effect
  • When the commodity is a giffen (a Giffen good is a product that people consume more of as the price rises and vice versa)
  • When the commodity is a necessity
  • Presence of habitual consumers such as smoker
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