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2. Factors Affecting Individual Supply
  A. Cost
 
The higher the cost of production, the smaller the supply of a good / resource, and vice versa. Cost can be affected by :
  Cost of production
Cost of production
 
 
 
1.
 
State of technology : improved technology helps to raise productivity. This lowers the cost of production.
 
 
Technology may affect the supply
Technology
 
 
2.
 
Prices of resources : if prices of resources rise, the cost of production will rise.
 
  B. Supply of key resources
 
1.
 
Disrupted supply of a raw materials : Shortage of raw materials will decrease the supply of a good.
 
  Raw Material
Raw material - e.g. Woods
 
 
2.
 
 
Change in the demand for a good in joint supply : Joint supply refers to s situation in which the production of a good results in the production of another good (i.e. by-product).
 
 
e.g.
 
 
if there is an increase in the demand for beef, more cows will be slaughtered. As this will increase the supply of cows' skin, it also stimulates the leather industry.
 
 
By-product of cow
By-product of cow
 
  C. Goverment policy
 
1.
 
 
Taxation and SubsidyMean : Tax imposed on a product will add the cost of production and reduce the supply. Conversely, if the goverment subsidizes a product, its supply will increase as the cost of production is reduced.
 
 
2.
 
Quota : The goverment may restrict the supply of a certain product by imposing a quota, i.e. setting limit on the quantity to be produced.
 
 
Goverment policy - Taxation, Subsidy and Quota
Goverment
 
  D. Weather
  Weather may affect the supply of goods
  e.g. bad weather affects the supply of crops.
 
  Bad Weather
Weather may affect the supply
 
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