In this article we will discuss about the exceptions to the law of supply.

The law of supply states that if, ‘other things’ remaining constant, only the price of a good increases or decreases, then, generally, the quantity supplied of the good will also increase or decrease. The significance of the word “generally” in this statement is that in some cases there may be exceptions to the law of supply.

Some of the cases where such exceptions may be obtained are described below:

First, if there is any good which cannot be produced again, then however high its price may be, its supply cannot increase. As an often given example of this case, it is said that the supply of paintings of a famous artist who is dead, cannot be increased even if a higher price is offered for it.


Second, it is generally observed that, if the price of a factor input increases or decreases, the sellers of the input also increase or decrease its supply. But, in the case of labour, we see that as its price, i.e., the rate of wage increases, an individual worker may reduce his hours of work and increase his hours of leisure. For, like income, leisure has also some utility to him.

Third, if the price of a good increases monotonically, and, if the sellers are of the opinion that the price will continue to rise for some time to come, then the supply of the good will fall although the price rises currently.

The sellers will hold back their supply, because they hope to sell the product at a higher price in near future. Conversely, if the sellers apprehend that the price of the good will continue to fall in future, then the supply of the good will rise although price falls currently, because they are apprehending more price falls in future.

Fourth, in the case of decreasing cost and constant cost industries, the LRS curve of the good, instead of rising upwards towards right, would slope downwards towards right and would be a horizontal straight line, respectively, because, in these cases, as the number of firms rises in the long run, the LAC at any output would fall and remain the same, respectively.