State and briefly explain any four main factors that may cause a fall in the supply of a good in the market.

State and briefly explain any four main factors that may cause a fall in the supply of a good in the
market.

Answers

1. Increase in cost of production: An increase in factor prices, for instance, tends to increase the cost of
production which reduces the ability of firms to maintain or even expand their scale of production
leading to a fall in supply.
2. Inappropriate technology: since production depends on the method(s) used, the decision to use less
mechanization than before, for example in agriculture, reduces the utilization of large pieces of land
and thus the supply of a product reduces.
3. Unfavorable natural events: In the event of unfavorable factors such as drought, pests or even
deteriorating soil fertility, the supply of a commodity tends to fall.
4. Government policy: the government as a matter of policy may decide to increase tax or reduce the
amount of subsidy provided in the production of a particular commodity. The effect of this decision is
an increasing production cost to a level which could become a disincentive to production, leading to a
fall in supply of the commodity.

Wilfykil answered the question on February 4, 2019 at 10:24

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State and briefly explain any four main factors that may cause a fall in the supply of a good in the market.

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