Law of supply with exceptions

law of supply

1. Law of Supply-With Exceptions Name: Girish Kumar Parmar Sub: Economics

2. Law of Supply Law of supply states that other things remaining the same, the quantity of any commodity that firms will produce and offer for sale rises with rise in price and falls with fall in price. i.e. Higher the price, higher will be the quantity supplied and lower the price smaller will be quantity supplied. ‘Other things remaning the same ‘ means determinants other than own price such as technology, goals of the firm, government policy, price of related goods, etc. should not change.

3. Supply schedule Price(in Rs) Quantity supplies(in kg) 10 1 20 2 30 3 40 4 Supply schedule is tabular statement showing various quantities which producers are willing to produce and sell at various alternative prices during a given period of time. It may be individual supply schedule or market supply schedule.

4. Supply curve Supply curve is a graphical representation of supply schedule. By plotting various combinations of price and quantity supplied of the table, we can derive an upward sloping of the table as shown in the figure. Supply curve slopes upward from left to right which means positive supply.

5. Exceptions Auction sale The law of supply states that quantity supplied increases with increase in prices and vice-versa. An auction sale takes place at the time when the seller is in financial crisis and needs money at any cost. Price exception of seller If the seller expects that the price of the commodity is going to fall in near future, he will try to sell more even if the price is very low. On the other hand, if the seller expects future rise in price of the commodity. He will not sell more even if the price level is high. It is against the law of supply. Stock clearance sale When a seller wants to clear its old stock in order to store new goods, he may sell large quantity of goods at lower prices. It is also against law of supply

6. Exceptions Fear of being out of fashion As we know that quantity supplied of a commodity is affected by fashion, taste and preferences of the consumer, technology and time. If the seller thinks that the goods are going to be outdated in near future, he sells more at a lower price which is also against the law of supply. Perishable goods Those goods which have very short life and they become useless after that are all perishable goods. Those goods must be available in market at its right time whatever be its price. So the seller becomes ready to sell his goods at any offered price. This is also against law of supply.

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