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Limitations/Exceptions of Law of Supply

  1. Limited Supply: There are some rare things the supply of which is limited and inelastic. In this case if price increase supply cannot be increased. Such as the picture of well known artists.
  2. Prospect of price: If the sellers think that there is a possibility to future change in price then this law will not operate.
  3. Increase in the wages: Sometimes increase in the wage rate may cause decrease in the supply of labor because of surplus income of a labor. Thus the law does not operate.
  4. Scarcity of the factor of production: If any factor of production is not available or if there is any problem of transportation or communication then the law may not operate.
  5. Seasonal product: In case of seasonal product supply doesn’t decrease in spite of decrease in price.
  6. Natural hazard: If production is hampered due to natural climaties then supply doesn’t increase in spite of a increase in price.
  7. Economic crisis: For economic disorder or crisis sometimes the producers or seller sale greater amount of commodity for lower prices.