Explain any four exceptions to the law of supply - Economics

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Answer in Brief

Explain any four exceptions to the law of supply

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Solution

The law of supply states that “Other things being constant, higher the price of a commodity, more is the quantity supplied and lower the price of the commodity, less is the quantity supplied”. The following are the exceptions to the law of supply:

  1. Agricultural Goods: The law of supply does not apply to agricultural goods. This is because their supply depends on weather conditions and they are produced in a specific season. If the natural conditions are unfavourable, then the agricultural production will be less. In such a case, even if the there is an increase in prices, the supply cannot be increased.
  2. Urgent Need For Cash: A seller who is in urgent need of cash may supply more quantity even at lower prices. The price may even be below the market price.
  3. Perishable Goods: In the case of perishable goods, the seller may supply more quantity, even at lower prices, in order to avoid losses. E.g.: Vegetables, fruits, bread, fish etc.
  4. Rare Goods: The supply of rare goods cannot be increased or decreased as per demand. Even if the price rises, the supply remains fixed. E.g., rare coins, antique goods, rare paintings etc.
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Chapter 4: Supply Analysis - Answer the following

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