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As price increases, why would quantity demand also increase?
As price increases, why would quantity demand also increase?
Expert Solution
As price increases, the quantity demanded may increase as well in cases where the law of demand has been violated. When this happens, the demand curve is positively sloped. Some reasons why the quantity demanded may increase with an increase in the price are:
- The case of Veblen goods. Veblen goods are goods whose value increases with an increase in price. For such goods, the demand increases with an increase in the price.
- The case of Giffen goods. Giffen goods are goods whose demand increases with an increase in price. An example of a Giffen good is a staple food such as rice. If the price of staple food increases, low-income consumers will cut their spending on other goods in order to consume rice.
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