explain in brief the determinants of supply
Answers
Determinants of supply (also known as factors affecting supply) are the factors which influence the quantity of a product or service supplied. The price of a product is a major factor affecting the willingness and ability to supply. ... However when the other determinants change, the supply curve is shifted.
Determinants of supply are factors that may cause changes in or affect the supply of a product in the market place.
Two factors that govern the supply of commodities:-
1) Goal of the firm: If goal of the firm is to maximize profits, more quantity of the commodity will be offered only at higher price. If goal of the firm is to maximize sales more will be supplied even at the same price.
2) State of technology: Improvement in the technique of production reduces cost of production. Consequently, more of the commodity is supplied at its existing price.