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Chapter 10: Problem 3

What would need to be true for a demand curve to be upward sloping?

Short Answer

Expert verified
The demand curve for a product would be upwards sloping if the good is a Giffen or Veblen good. As the price rises, the demand for these goods increases.

Step by step solution

01

Define Normal Demand Curve

Usually, the law of demand governs the demand curve, which states that as the price of a product increases, consumer demand decreases, and vice versa. By convention, this results in a downward sloping curve.
02

Understand Exceptional Products

There are, however, exceptional types of goods that don't follow the usual trends: Giffen and Veblen goods. Giffen goods are inferior goods that lack close substitutes and whose demand increases as prices rise. Veblen goods are luxury items where higher prices can increase their appeal.
03

Deduce the Conditions for Upward Sloping Demand Curve

For a demand curve to be upward sloping, the good in question would need to be either a Giffen good or a Veblen good—having unique characteristics that make consumers demand more of them as their prices rise.

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