Basic supply determinants of other than price

Question

Illustrate the 6 basic supply determinants of other than price?

Answer 1

The 6 basic supply determinants of other than price are:-

1. Resource prices—a rise in resource prices will cause a decrease in supply or leftward shift in supply curve; a decrease in resource prices will cause an increase in supply or rightward shift in the supply curve.

2. Technology—a technological improvement means more efficient production and lower costs, so an increase in supply or rightward shifts in the curve results.

3. Taxes and subsidies—a business tax is treated as a cost, so decline in supply; so increases in supply is a subvention lowers cost of production,.

4. Prices of related goods—if price of substitute manufacture good rises, producers might shift production toward the higher priced good which causes decrease in supply of original good.

5. Expectations—expectations about the future price of a product can cause producers to increase or decrease current supply.

6. Number of sellers—generally, the larger the number of sellers the greater the supply.