What are are the Determinants of Supply?/ What Causes a Shift in Supply?
Posted by Ripon Abu Hasnat on Tuesday, May 27, 2014 | 0 comments
Effects of
Rising Costs
Input
costs can have a major effect on the production and supply of goods and
services. Gas prices can limit the
services of a landscaper or paper delivery person.
Technology
Increases in the ability to produce because of
technological advances can shift the supply curve to the right. Breakdowns in
technology can shift it to the left.
Subsidies
Government payments to firms can act as an
incentive to produce more, which can affect supply. If government removes
subsidies the curve will shift left.
Taxes
Government taxation towards firms can act as an
incentive to produce, which can affect supply. If government removes taxes the
curve will shift left, increases shift right.
Future
Expectations
How suppliers view the future of the economy will
affect their production of inventory today. If they think the economy is strong
they will increase production today and Vice versa.
Number of
Suppliers
Firms increase whenever their profit is to be made.
They decrease whenever profit is reduced. Both will shift the curve to the
right or the left.
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