What Is Limitations Of Demand Law?


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The law of demand says that “all factors remaining equal, as the price of a good increases, consumer demand for the good will decrease and vice versa.” This law has some limitations such as:

  • The law assumes that all things remain equal which is not the case in reality. Markets are dynamic and hence factors like supply and inflation do not remain constant and have important implications for the law of one price.

  • The law does not take into account the preferences of the people. The law may not hold true in the case of luxury or branded items. People who are brand conscious do not care about the price and the demand remains unaffected. Same can be the case with necessities like wheat, rice and bread, even if its expensive, people will still buy it.

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