What are the factors that affect supply?
Some of the factors that influence the supply of a product are described as follows:
- i. Price:
- ii. Cost of Production:
- iii. Natural Conditions:
- iv. Technology:
- v. Transport Conditions:
- vi. Factor Prices and their Availability:
- vii. Government's Policies:
- viii. Prices of Related Goods:
The Tastes and Preferences of Consumers. There are all kinds of things that can change one's tastes or preferences that cause people to want to buy more or less of a product. For example, if a celebrity endorses a new product, this may increase the demand for a product.
- The four basic laws of supply and demand are: If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity. If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.
- Some circumstances which can cause the demand curve to shift in include: Decrease in price of a substitute. Increase in price of a compliment. Decrease in income if good is normal good.
- The five determinants of demand are:
- The price of the good or service.
- Prices of related goods or services.
- Income of buyers.
- Tastes or preferences of consumers.
Updated: 25th September 2018