Question

Explain any four exceptions to the law of supply.

Point out any exceptions to the law of supply.

Answer 1

The law of supply states that “Other things being constant, the higher the price of a commodity, the more is the quantity supplied, and the lower the price of the commodity, the 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 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 a larger 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.