The law of demand shows the negative relationship between price and quantity demanded of a commodity if other things remain constant. The exceptions to the law of demand are as follows.
a) Inconsistency of ceteris paribus assumption: Law of demand has an assumption those other things (include
the number of consumers in the market, consumer tastes or preferences, prices
of substitute goods, consumer price expectations, and personal income) than price will remain constant. If any of those factors changes, demand
law will not work.
b) Giffen goods: The lowest
quality category of a necessary commodity is classified as Giffen goods
according to the name of Sir Robert Giffen. When price of a commodity rises,
quantity demanded of Giffen goods increases.
c) Veblen goods: According to
economist Thorstein Veblen, some consumers measure the utility of a commodity
entirely by its price. The greater the price will be, the greater the utility.
Diamond as prestigious goods is an example of this category.
d) Inferior goods: The
commodities that have a very low price and use a very small portion of income
do not follow the law of demand.
e) Change in product quality: If there is a change in product quality, the demand for that will be
affected irrespective of price change.