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Question
There are no exceptions to the law of supply.
Options
Agree
Disagree
Solution
I disagree with the given statement.
Reason:
Exceptions to the law of supply:
- Anticipation about future price: If the sellers anticipate a future rise in price, they may withhold the supply with a view to earn more profits in the future. Even if the price is high, sellers are not ready to release the goods in anticipation of further rise in price, expecting to make huge profits.
- Labour Supply: Workers normally prefer leisure after reaching certain amount of wage level. Therefore, after reaching that high level of wages, the labour supply will decline, even if they are offered more wages so, the supply of labour becomes a backward bending curve, indicating that initially the supply of labour is directly related to wage, but after a particular limit of wag level, the supply of labour becomes inversely related to wage.
- Need for urgent funds: A businessman may face an urgent need for funds, and as such he may sell out more goods even at lower prices. This is an exception to the law of supply.
- Change in Fashion: If some goods become out of fashion, the sellers may sell such goods at a throw away prices to clear off these goods. This is also an exception to the law of supply.
- Perishable goods: The sellers have to dispose of the perishable goods like meat, fish, fruits, flowers etc., even if the price falls. They can not wait for longer time for the price to rise, in order to increase supply.
- Period of recession: During recession period the sellers are forced to sell the goods are low prices. This is because during recession, the purchasing power of the people is very low.
RELATED QUESTIONS
Distinguish between Expansion of Supply and Increase in Supply.
Distinguish between Contraction of Supply and Decrease in Supply
Exceptions to the law of supply:
- Constant cost of production
- Constant technique of production
- Does not apply to agricultural goods
- No change in weather conditions
Give economic terms:
Rise in the quantity supplied of a commodity due to a rise in its price, other factors remaining constant −
Find the odd word
Exception to law of supply -
Downward movement along the same supply curve should ______.
Assertion (A): The supply curve of labour slopes downwards.
Reasoning (R): After a certain point of time, when wage rate rises, the supply of labour (hours of work) tends to fall.
State with reason whether you agree or disagree with the following statement:
The supply curve of labour is backward bending.
State with reason whether you agree or disagree with the following statement:
There are many exceptions to the law of supply.
Identify and explain the concept from the given illustration:
Mahesh supplied (sold) more fruits at a comparatively low price due to the perishable nature of fruits.
Law of supply does not apply to ______.
The supply of perishable goods like milk, vegetables, fish is ______.
Discuss any two exceptions to the law of supply.
State one exception to the law of supply.
