Chapter 2

Question 1

Expections to Law of Demand - Veblen good

Answer 1

= A luxury item whose price does not follow the usual laws of supply and demand.
- I.e. rather than the demand decreasing as price increases, the item becomes more desirable, due to its luxury nature.

Question 2

Expections to Law of Demand - Giffen good

Answer 2

= A good consumed in very poor communities who have a limited choice of goods, for which the usual laws of supply and demand don’t apply