What is the law of supply explain are their any exceptions?
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Answer:
Law of Supply Meaning
The law of supply describes the practical interaction between the price of a commodity and the quantity offered by producers for sale. The law of supply is a hypothesis, which claims that at higher prices the willingness of sellers to make a product available for sale is more while other things being equal. When the price of a product is high, more producers are interested in producing the products. On the contrary, if the price of a product is low, producers are less interested in producing the product and hence the offer for sale is low. The concept of law of supply can be explained with the help of a supply schedule and a supply curve.
Exceptions to the Law of Supply
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.
5. Backward sloping supply curve of labor
Explanation:
what is article of distinction on exception to the law of demand?