ECON AL PAST PAPER1999

If some or all individuals in the market have upward rising demand curve, so that the higher the price, the more quantity they would be willing to buy, we will not be able to obtain the market equilibrium condition of MUVa = MUVb = ... = P.

More specifically, in a market setting many people are competing for that good as the same time. So only the ones who are most willing and able to pay will use up all their incomes and succeed in buying up all the good at a significantly high price, and will not be willing to exchange it anymore in the market since no one is willing and able to pay a further higher price for it. As a result, there will be no exchange for that good and theorem of exchange can no longer apply.

Without law of demand:
-without law of demand = without law of diminishing MUV
- some or all individuals in the market have upward rising demand curves
- higher the price, the more quantity they would be willing to buy
- cannot obtain the market equilibrium condition, MUVa = MUVb = ….. = P.
-So, there will be no theorem of exchange.
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