Firstly, if the concerned good is a
Giffen good the rational consumer will go on decreasing his consumption of the
good as the price falls. This is because a Giffin good is such that the
consumer purchases less and less of the good as its price falls and vice versa.
It was noticed by Giffen that when the prices of bread increases, consumers
curtailed their consumption of meat and other expensive items and consumed more
bread.
Secondly, a consumer may judge a good by
its price. This behavior of the consumer is known as Veblem effect due to a
change in price. Thus, when a price hike takes place for a good the consumer
may be misguided to think that a quality improvement has taken place and he
consumes more of the product.
Thirdly, it so happens that when the
price of a good is on a rise the consumer it to rise further. In such a case he
may purchase more and more units of a good as its price goes on increasing.
Fourthly, in the share market it is
noted that when the price of a particular share rises its demand also increases
to some people and vise versa.
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