04-25-2015, 10:15 AM
[ltr]Determinates of supply or factors affecting changes in supply[/ltr]
[ltr]The main determinates of supply or factors affecting the supply curve are as follows :
[ltr]1. Price of the Commodity – There is a direct relationship between price of a commodity and its quantity supplied. Generally, higher the price, higher the quantity supplied, and lower the price, lower the quantity supplied.[/ltr]
[ltr]2. Changes in technology – If improved and advanced technology is used for the production of a commodity, it reduces its cost of production and increases the supply. [/ltr]
3. Changes in the prices of factor inputs – With the rise in the prices of factor-inputs production cost also rises. Other things being equal, if production cost increases, supply would fall at each price On the other hand, if because of fall in the prices of factor inputs production cost decrease.
4. Changes in the prices of other commodities – Other things remaining the same, the supply of one commodity falls as the prices of other related commodities rise. .
[ltr]5. Effect of Taxation – Other things being equal, increase in taxes reduces supply and decrease in taxes increases the supply [/ltr]
[ltr]6. Effect of change in season – Specially in the field of agriculture, good rainfall and favorable weather conditions may increase production of agriculture goods. [/ltr]
7. Change in the number of firms in the market
[/ltr]
[ltr]The main determinates of supply or factors affecting the supply curve are as follows :
[ltr]1. Price of the Commodity – There is a direct relationship between price of a commodity and its quantity supplied. Generally, higher the price, higher the quantity supplied, and lower the price, lower the quantity supplied.[/ltr]
[ltr]2. Changes in technology – If improved and advanced technology is used for the production of a commodity, it reduces its cost of production and increases the supply. [/ltr]
3. Changes in the prices of factor inputs – With the rise in the prices of factor-inputs production cost also rises. Other things being equal, if production cost increases, supply would fall at each price On the other hand, if because of fall in the prices of factor inputs production cost decrease.
4. Changes in the prices of other commodities – Other things remaining the same, the supply of one commodity falls as the prices of other related commodities rise. .
[ltr]5. Effect of Taxation – Other things being equal, increase in taxes reduces supply and decrease in taxes increases the supply [/ltr]
[ltr]6. Effect of change in season – Specially in the field of agriculture, good rainfall and favorable weather conditions may increase production of agriculture goods. [/ltr]
7. Change in the number of firms in the market
[/ltr]