Exceptions to the Law of Supply

A few genuine situations depart from the Law of Supply, where quantity supplied does NOT move in the same direction as price, or is entirely unresponsive to it.

• Goods with a fixed/rare supply. The supply of a rare antique, an original painting by a celebrated artist, or a plot of land in a specific prime location cannot be increased however high the price rises — quantity supplied stays fixed regardless of price (a perfectly inelastic, vertical supply curve — see the elasticity discussion below).
• Perishable goods facing distress sale. A seller of a highly perishable commodity (fresh vegetables, fish, milk) that cannot be stored may be forced to sell the ENTIRE available stock even at a falling price, rather than let it spoil unsold — so quantity supplied does not fall even as price falls.
• Backward-bending supply curve of labour. Beyond a certain wage rate, a further RISE in the wage rate can cause workers to supply FEWER hours of labour, not more — having already secured a comfortable income, workers may prefer additional leisure over additional income, so the supply curve of labour bends backward at high wage levels instead of continuing to slope upward.
• Expectation of a further price fall. If sellers expect the price of a commodity to fall further in the near future, they may rush to sell MORE right now, even at today's already-falling price, to avoid an even bigger loss later — reversing the usual price–supply relationship. …