Exceptions to the Law of Supply

A few real situations depart from the Law of Supply, where quantity supplied does not simply rise with price.

• Perishable / immediate-period goods. For highly perishable produce (fresh vegetables, fish) sold on a given market day, the stock actually on hand is fixed — the seller cannot produce more that same day whatever the price offered. In this market period, the supply curve is effectively vertical (perfectly inelastic).
• Distress sale. A seller facing an urgent need for cash, or lacking storage facilities, may be forced to sell more even as price is falling, simply to raise enough money to meet pressing obligations.
• Expectation of a further price fall. If sellers expect the price to fall still further in the near future, they may offload larger quantities right now, even at today's lower price, rather than hold stock that they expect to be worth even less later.
• Backward-bending supply curve of labour. Beyond a certain wage rate, some workers may choose to work fewer hours as the wage rises further, preferring additional leisure to additional income once their income needs are comfortably met — so the supply curve of labour bends backward at high wage levels instead of continuing to slope upward. …