Economics · Law of Demand
Examine the following statements regarding the Law of Demand and its exceptions: Statement I: The Law of Demand assumes that factors other than price, such as consumer income and tastes, remain constant (Ceteris Paribus). Statement II: In the case of speculative assets like certain stocks or cryptocurrencies, a rise in price can sometimes lead to a rise in quantity demanded, which is an exception to the Law of Demand. Statement III: The substitution effect and income effect always work in the same direction for all types of goods, leading to a downward-sloping demand curve. Statement IV: For highly prestigious 'Veblen Goods,' the demand curve can be upward-sloping over a certain price range. Which of the statements given above are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Only Statement I is correct.
- 2Statement II and IV are correct.
- 3Statement I and III are correct.
- 4Statement I, II, and IV are correct.✓
Correct answer
Statement I, II, and IV are correct.
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