Question

How is the supply of a commodity effected?(a) increase in price of relatd goods.(b) favourable change in goverment policy.​

Answer 1

Answer:

A. Increase in price of related goods

Answer 2

The supply of a commodity will increase if the price of a related good increases and any favorable change in government policy will also lead to the increase in commodity supply.

Explanation:

An increase in price of related goods implies lesser consumer demand for that particular commodity and higher consumer demand for the concerned commodity,which will induce the suppliers or the existing firms to expand the production of the commodity in concern and increase potential revenue.Therefore,higher consumer demand would lead to an increase in supply.

Any favorable government policy change such as a profit/corporate tax cut or providing input or production would lead to an increase in the supply as policy supports such as the ones mentioned would encourage producers or firms to expand production/supply either because of cost reduction through tax cut or input subsidy or support.