Factors influencing supply curve, Managerial Economics

Factors influencing Supply Curve

State of technology    

There is a direct relationship between supply and technology.  Improved technology results in more supply as with technology there is mechanisation.

Natural events

Natural events like weather, pests, floods, etc also affect supply.  These affect particularly the supply of agricultural products.  If weather conditions are favourable, the supply of agricultural products will increase.  Conversely, if weather conditions are unfavourable the supply of such products will fall.


In the long run (with time), the supply of most products will increase with capital accumulation, technical progress and population growth so long as the last one takes place in step with the first two.  This reflects economic growth.

Supply of Inputs

Changes in supply of inputs will affect the quantity supplied; if this falls, less shall be supplied and vice versa.

Changes in the supply of the product with which the product in question is in joint supply e.g. hides and skins.

Taxes and subsidies

The imposition of a tax on a commodity by the government is equivalent to increasing the costs of production to the producer because the tax "eats" into the firm's profits.  Hence taxes tend to discourage production and hence reduce supply.  Conversely, the granting of a subsidy is equivalent to covering the costs of production.  Hence subsidies tend to encourage production and increase supply.

Posted Date: 11/27/2012 6:02:31 AM | Location : United States

Related Discussions:- Factors influencing supply curve, Assignment Help, Ask Question on Factors influencing supply curve, Get Answer, Expert's Help, Factors influencing supply curve Discussions

Write discussion on Factors influencing supply curve
Your posts are moderated
Related Questions
Measuring Point Elasticity on a Non-linear Demand Curve Let's now explain the method of measuring point elasticity on a non-linear demand curve. Assume we want to measure the

Perfectly Elastic Supply Supply is said to be perfectly or infinitely elastic if the price is fixed at all levels of demand.  The demand curve has been shown in the above diag

Consider a manufactured good whose production process generates pollution. The annual demand for the good is given by Qd=100-3P. The annual market supply is given by Qs=P. In both

Compensatory Financing Two other schemes for alleviating the effects of commodity trade instability have been operating for a number of years.  These are the IMF's Compensator

Describe the Managerial decisions Managerial decisions are an important component in the working wheel of an organisation. The failure or success of a business depends upon the

Using the same simple macro model we developed in Module 2: a.  Show what will happen to national income (GDP) if the administration implements another $100 (billion) stimulus s

a bus operates two routes,one to harare and another one to johanesburg.the company analyst estimated that the elasticity of demand for joburg is 0.9 while for harare is 2.the compa

Practical Importance of the knowledge of Price Elasticity of demand The practical importance of the measures of elasticity of demand is to be appreciated in various ways:

Discuss the full cost pricing and marginal cost pricing method. Explain how the two  methods differ from each other.

measurement and scaling techniques in business research