What are the Exceptions of law …

The law of supply states that other things being equal, the supply of a commodity extends with a rise in price and contracts with a fall in price. There are however a few exceptions to the law of supply.

1. Exceptions of a fall in price : If the firms anticipate that the price of the product will fall further in future, in order to clear their stocks they may dispose it off at a price that is even lower than the current market price.

2. Sellers who are in need of cash: If the seller is in need of hard cash, he may sell his product at a price which may even be below the market price.

3. When leaving the industry : If the firms want to shut down or close down their business, they may sell their products at a price below their average cost of production.

4. Agricultural output : In agricultural production, natural and seasonal factors play a dominant role. Due to the influence of these constraints supply may not be responsive to price changes.