Factors affecting Supply
Non – Price Factors
- This is the amount offered for sale and causes a shift in the supply curve
Factors affecting Supply
- Cost of production - increase in cost of production causes a shift left as lower profit margin
- Taxes on the good - a tax is an increase in a firm's cost of production
- Subsidies on the good - a subsidy is a decrease in a firm's cost of production
- Natural disasters - a flood would cause a decrease in the supply of rice
- Wage Rate - wages are included in a firm's cost of production
- Depletion of natural resources - fewer natural resources causes supply to shift left
- Improvement in technology - this improves the quality of capital and increases productivity, lowering a firm's cost of production
