The Exception to the Law of Supply are are:
a) Artistic Goods
b) Auction Goods
c) Agricultural Products
d) All of the Above
Answers
Answer:
When the price of a product is high, more producers are interested in manufacturing the products. On the contrary, if the price of a product is low, manufacturers are less interested in producing the product and therefore the offer for sale is low. However, there are exceptions to law of supply and demand.
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Questions
On the basis of the supply schedule shown in the table below, prepare a Market Supply Schedule :
Price (Rs. per unit)
Individual Firms
Market Supply Schedule (Units)
A (Units) B (Units) C (Units)
5 10 16 20
8 15 20 24
10 18 24 30
12 20 28 36
1 Verified answer
If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the consumers of the good to ______.
1 Verified answer
Briefly explain any two determinants of supply.
1 Verified answer
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Exceptions to Law of supply
The normal law of supply is widely applicable to a large number of Products. There are certain exceptions to law of supply, like a change in the price of a good does not lead to a change in its quantity supplied in the positive direction.
The law of supply is not a universal principle that applies to all circumstances. There are, in fact, various important exceptions to the law of supply. Some exceptions to law of supply are given below:
Change in business
Monopoly
Competition
Perishable Goods
Legislation Restricting Quantity
Agricultural Products
Artistic and Auction Goods
Quick summary
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Introduction to Supply
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Total Output, Stock and Supply
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1. Change in business
It may happen that the seller may plan to enter into an entirely new business by exiting the current one. So when the present business is on the verge of closure then the seller may sell his goods at lower prices to clear them off. So here too the law of supply is not being followed.
Browse more Topics under Basic Elements Of Demand And Supply
Determinants of Demand
Law of Demand
Demand Schedule
Individual and Market Demand Curve
Change in Demand
Exceptions to Law of Demand
Concept and Determinants of Supply
Law of Supply
Supply Schedule
Individual and Market Supply Curve
Change in Supply
Equilibrium Price
Price Elasticity of Demand
Cross Price Elasticity of Demand
Income Elasticity of Demand
Price Elasticity of Supply
2. Monopoly
When a small number of producers control the supply of the market then the law of supply may not operate. For example, in the case of monopoly (single seller) may not necessarily offer a larger quantity supplied even though the price of goods is higher. Market control by the monopoly allows it to set the market price based on demand in the market.
3. Competition
Other market structures like an oligopoly and monopolistic competition may be facing more competition, therefore offering to sell more quantities at lower prices and negating the law of supply.
4. Perishable Goods
In cases of perishable goods, the supplier would offer to sell more quantities at lower prices to avoid losses due to damage to the product.
5. Legislation Restricting Quantity
Suppliers cannot offer to sell more quantities at higher prices where the government has put some regulations on the quantity of the good to be produced or the price ceiling at which the good is to be sold in the market.
6. Agricultural Products
Since the production of agricultural products cannot be increased beyond a certain limit, the supply can also not be increased beyond this limit even if the prices are higher; the producer is unable to offer more quantities.
7. Artistic and Auction Goods
The supply of such goods cannot be increased or decreased easily according to its demand. Thus, it is difficult to offer more quantities even if the prices shoot up.
Explanation:
Answer - (d) All of the above
Agricultural Products
Since the production of agricultural products cannot be increased beyond a certain limit, the supply can also not be increased beyond this limit even if the prices are higher; the producer is unable to offer more quantities.
Artistic and Auction Goods
The supply of such goods cannot be increased or decreased easily according to its demand. Thus, it is difficult to offer more quantities even if the prices rise.