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Question
The following table shows the amount of sugar bought by a household at different prices:
| Period | Price (₹ per kg) | Amount Bought (kg) |
| Jan. 2000 | ₹ 15 | 4 |
| Feb. 2000 | ₹ 16 | 5 |
Does the behaviour of household contradict the law of demand? Give reasons in support of your answer.
Solution
Yes, household behaviour defies the law of demand, which states that when prices rise, the quantity demanded falls and vice versa. There is a correlation between the price and quantity demanded for a good.
However, if sugar prices rise, so will demand. Thus, this occurs in exceptions to the law of demand or in the instance of the substitution effect, which states that if the price of a commodity rises, so does the demand for its substitute. Thus, it happens with normal goods as well, i.e., as consumer wealth rises, so does demand for normal goods, and sugar is a normal item. Thus, there are numerous arguments to support this answer.
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