upward-sloping demand curve

Upward-sloping demand curveclick for a larger image
Fig. 191 Upward-sloping demand curve.

upward-sloping demand curve

a DEMAND CURVE that shows a direct rather than an inverse relationship between the price of a product and quantity demanded per period of time, over part or all of its length.

Most demand curves are based on the assumption that consumers are rational in buying products and have full knowledge of price and product characteristics. Where either of these assumptions is modified then the DEMAND FUNCTION can result not in a normal product as in Fig. 191 (a) but in an upward-sloping demand curve as in Fig%. 191 .

In Fig. 191 (a), if price increases from OP1 to OP2, quantity demanded falls from OQ1 to OQ2. In Fig%. 191, if price increases from OP1 to OP2, quantity demanded increases from OQ3 to OQ4. This can be because of:

  1. conspicuous consumption (see VEBLEN EFFECT);
  2. a real or perceived belief that as price increases quality improves;
  3. or because the product is a GIFFEN GOOD. See also INCOME EFFECT, ENGELS LAW.