The Law Of Demand

Supply and demand have an inverse relationship where the more the supply comes in the market the less price people will agree to pay and vise versa.

Let's discuss a real-life instance on it. It wasn't even a year in India where we saw the price of the onion went up to Rs. 200/Kg. which is ordinarily sold at a price around Rs.20-40/Kg.. This is because of the shortage. I remember, how we had to stand in the queue to get onions from the Reasonable Shop by State Govt. 

If you look just the previous year you will find that our farmers produced so much onions that they had to sell it at less than Re. 1/Kg.. Due to this overproduction, they faced loss because there were more onions than requirements. 

Contradiction Of The Law Of Demand

In this phenomenon I described is the best easy example of demand and supply. So, The relation is inverse. 

(Presently, even in this pandemic, we are buying it around Rs. @20-35/Kg.).

But hey hold on a bit! This is only the demand-supply relationship. What if I say, there are few examples where we find a linear relationship between them. Yes, it is also possible in some cases. These are the anomalies of demand-supply theory. Let's explore,

• Giffen Goods: When the price of a few required goods rises on which their living of the low-income section is fully dependent, they forced to buy the costlier goods than before because of the unavailability of any close substitute. For example, if you look at this pandemic due to COVID 19 few poor country people compel to buy edibles at higher prices because they can't afford even more pricy goods.

• Veblen Goods: When the demand increases although the price increases. Veblen Goods are the luxury goods. Sometimes to maintain status and sometimes when people consider the price as its real quality.

• Share Market: Well, needless to say how it works. If someone has a slight idea, the one can say how does it work. If the price of any share goes up, people aggressively buy it. Which we call a bluish trend. If the price decreases, it seems like a panic button is pressed people start selling shares resulting in the share falls more. which is a bearish trend.
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• Speculation: It is when people suspect that very useful goods will disappear from the market. So, people fiercely buy it without knowing anything. A very good example, happened in Bihar And very recently in Odisha where the price of salt grew suddenly (probably by few speculators) still people buy it nonsensically, without understanding the situation. They bought the salt at a higher price and more in quantity because they thought they might lose the opportunity of getting salt. Such panic buying we can see in people very often in large or small cases.

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