Question

What is supply explain the factors affecting supply?

Answer 1

Supply: This refers to the willingness and ability of a producer to sell a good or service at a given price.

Supply is one of the main determinants in a free market economy, and setting an equilibrium in a market as well.

Many factors affect supply, following are some factors:

1- The cost of production

2- The cost of labor vs cost of capital

3- The taxation at the hands of the government

4- Inflation rate

5- price of substitutes

6- governmental policies against that good, example: Cigarette

7-Technology

8- Natural conditions

9-Price

Answer 2

1. Price of the substitutes
2. The price of factors of production
3. Change in technology
4. The price of the commodity
5. Expected change in price
6. Taxation policy
7. Means of transport
8. Number of producers
9. Natural factors