What factors may cause a decrease in supply of a commodity in the market?

      

List factors that may cause a decrease in supply of a commodity in the market.

  

Answers


Maurice
(i) Wrong timing,Agricultural products are only available at certain times.

(ii) Withdrawal of firms from industry leads to less supply of commodities.

(iii) Increase in cost of production, which will increases the price of commodity/ may force some producers out of business resulting in total lower supply of commodity.

(iv) Shortage of factors of production, which will lead to reduced supply.

(v) Decrease in levels of technology, leading to increased production costs.

(vi) Adverse changes in government policy that is, reduction of subsidies and increase in taxes.

(vii) Future expectation of increase in prices.
People may hoard goods to wait price increase leading to reduced supply.

(viii) Unfavorable natural factors like floods, weather, diseases and pests.
maurice.mutuku answered the question on August 11, 2017 at 06:55


Next: What are the causes of business success in Kenya?
Previous: What disadvantages may a country experience from imposing trade restrictions on trading partners?

View More Business Studies Questions and Answers | Return to Questions Index


Exams With Marking Schemes

Related Questions