factors effecting supply
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Answer:
Factors affecting the supply curve
A decrease in costs of production. This means business can supply more at each price. Lower costs could be due to lower wages, lower raw material costs
More firms. An increase in the number of producers will cause an increase in supply.
Investment in capacity. Expansion in the capacity of existing firms, e.g. building a new factory
The profitability of alternative products. If a farmer sees the price of biofeuls increase, he may switch to growing crops for biofuels on all his fields and this will lead to a fall in the supply of food, such as wheat.
Related supply. If there is an increase in the supply of beef (from cows) then there will also be an increase in the supply of leather.
Weather. Climatic conditions are very important for agricultural products
Productivity of workers. If workers become more motivated and work hard, then there will be significant increase in output and supply.
Technological improvements. Improvements in technology, e.g. computers or automation, reducing firms costs.
Lower taxes. Lower direct taxes (e.g. tobacco tax, VAT) reduce the cost of goods.
Government subsidies. Increase in government subsidies will also reduce the cost of goods, e.g. train subsidies reduce the price of train tickets.
Objectives of firms. If firms are profit maximisers and collude with other firms, we may see a fall in supply as they try to maximise profits. However, if they switch to targetting sales or revenue maximisation, then we will see an increase in supply.