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Factors influencing supply of a commodity
- Number of sellers in the market – increase in seller in the market increases the supply of a given commodity in that market.
- Price of related goods – if the price of other related products increases, the demand for other product (related) increases hence
increasing their supply. (Examples must be in Agric.)
- Price expectation – the supply of a commodity will be low if the future price of the same commodity is expected to increase.
- Technology – modern techniques of production leads to increased production of goods and subsequently increased in supply.
- Weather – favourable weather conditions leads to increased production, which means more goods available for sale.
- Government policy – If the government increases tax on a particular commodity the price of that commodity increased hence
decrease in supply of that commodity.
- Changes in prices – increase in the price of a commodity increases the supply of that commodity.
- Cost of production – lower cost of production increases the production output hence increase in supply.
- Increase in supply of associated goods – increase in the supply of an associated commodity increases the supply of the other.
- Transportation system – improve and efficient means of transport enables goods to be delivered to market on time hence increases their supply.
john3 answered the question on December 10, 2017 at 05:36
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