[amp_mcq option1=”Diminishing marginal utility” option2=”Giffen paradox” option3=”Different uses of products” option4=”Price of substitute goods” correct=”option2″]<\/p>\n
The correct answer is B. Giffen paradox.<\/p>\n
The law of demand states that, all other things being equal, the higher the price of a good, the less people will demand that good. However, there are some exceptions to this rule. One exception is the Giffen paradox, which occurs when a good is so essential to a person’s survival that they will actually demand more of it even as the price increases. This can happen when a good is a staple food or when it is the only affordable option available.<\/p>\n
Diminishing marginal utility is the principle that as a person consumes more of a good, the additional satisfaction they receive from each additional unit of the good decreases. This means that the person is willing to pay less for each additional unit of the good. However, diminishing marginal utility does not necessarily mean that people will demand less of a good as the price increases. In fact, people may still demand more of a good even as the price increases, as long as the additional satisfaction they receive from each additional unit of the good is still greater than the price they have to pay for it.<\/p>\n
Different uses of products can also affect demand. For example, if a product can be used for multiple purposes, the demand for that product will be higher than if it could only be used for one purpose. This is because people will be willing to pay more for a product that can be used for multiple purposes.<\/p>\n
The price of substitute goods can also affect demand. Substitute goods are goods that can be used in place of each other. For example, coffee and tea are substitute goods. If the price of coffee increases, people will be more likely to demand tea instead. This is because tea is a substitute for coffee and can be used in place of coffee.<\/p>\n
In conclusion, the correct answer to the question “Exception of the law of demand is: A. Diminishing marginal utility B. Giffen paradox C. Different uses of products D. Price of substitute goods” is B. Giffen paradox.<\/p>\n","protected":false},"excerpt":{"rendered":"
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