Economics · Theory of Demand
Consider the following statements regarding exceptions to the Law of Demand: Statement I: The Veblen Effect occurs when consumers purchase expensive goods to demonstrate wealth and social status, leading to an upward-sloping demand curve for luxury items. Statement II: Speculative demand arises when consumers expect prices to rise even further in the future, causing them to increase current purchases despite a recent price hike. Statement III: The Law of Demand fails in the case of Giffen goods because the substitution effect for these inferior products is always positive and larger than the income effect. Which of the statements given above are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1I, II and III
- 2Only II and III
- 3Only I and II✓
- 4Only I
Correct answer
Only I and II
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Theory of Demand MCQs →Want more practice questions on Theory of Demand?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Theory of Demand