Paradox of Law of Demand : STOCK MARKETS!

One of the biggest paradox of the Law of demand is The Stock Market. This is how it goes, Law of demand states that an increase in price leads to a decline in demand and a decrease in price leads to an increase in demand, but in the Stock Markets say price of share X keeps rising , more and more people try to purchase it at increasing prices resulting in an increase in demand of that particular stock, rather than ignoring to purchase that share at a higher price, as proposed in the Law of Demand , on the other hand say the price of that particular shares starts falling down sharply, more and more people try to sell their holdings resulting in a decline in demand of the stock , rather than buying it at a lower price as proposed in the Law of Demand.



This relationship between the Stock Market and Law of demand is mainly due to the speculations of the people who expect that there is some good news behind a particular scrip due to the rising prices of the share and on the other hand they speculate some bad news as the reason behind the fall ofthat particular script!

Quite Interesting, AIN'T IT ? :-)