Question

Explain five factors which influence supply for a commodity

Answer 1

Answer:

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Explanation:

Following are the factors that affect the supply of a commodity : 1. Prices of all other commodities – The supply of a commodity depends upon the prices of all other commodities. If prices of all other commodities rise, they will become relatively more attractive to produce and the supply of the commodity, the price of which has not changed will become less attractive and, therefore, its supply may fall. 2. Prices of factors of production – A rise in prices of factors of production of a commodity will make the production of that commodity less profitable. The supplies of other commodities will increase at the expense of the commodity which has experienced a large rise in costs. 3. State of technology – Technical advances based on new discoveries and innovations lower the cost of production resulting in more and more supplies of a commodity. With the change in technology, new products are supplied resulting in decline of supply of existing products.

Answer 2

Answer:

Explanation:

Price of the given Commodity: The most important factor determining the supply of a commodity is its price. ...

Prices of Other Goods: As resources have alternative uses, the quantity supplied of a commodity depends not only on its price, but also on the prices of other commodities.

Prices of Factors of Production (inputs): When the amount payable to factors of production and cost of inputs increases, the cost of production also increases.

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