O Level Economics factors affecting Supply

Factors   affecting  supply

 

 

 

1.The  price  of the  commodity :

The higher  the price  of a commodity  , the greater  the  quantity  supplied  and the  lower the price the  lesser  the quantity  supplied

 

2.The  prices  of other  commodities :

This affects  goods  that  are  in close  substitute  . All things  being  equal the  supply  of one  commodity  would  fall as the  price  of its  substitute rises

 

  1. Weather conditions :

This  mostly affects  the  supply of  agriculture  product variation in weather    condition will either increase  or  reduce  supply .    Bad weather  condition will reduce  supply and good  weather  condition will increase  the supply , Natural factors such as  floods  , drought  , storms   and  hurricanes  can affect supply negatively .

 

4.Cost  of production :

An increase  in the cost  f production  without  a corresponding  increase  in the price  of the  goods , will reduce  the supply of the  goods into the market .A  decrease in the  cost  of production with or without  a  corresponding  increase  in the  price  of goods  will lead to  an increase  in the supply  of the  goods  into  the market

 

5.state  of technology :

Technological development  facilitate division  of labour  and division  of labour  makes possible  mass  production .Where the state  of technology  is low  in the 

Production of a good  , the supply  will  be  low and  when it is  high  the  supply  of the  good  produce  will  be high .

 

6.Government policy :

The government  mainly  influence  the  supply  by  providing or  granting   subsidies  to  industrialist subsidies reduce the cost  of production and  consequently increase  the supply  of the good in the market .On the other hand  government  policy  can reduce  the supply  of a  commodity  through  the  imposition  of positive  taxes  such as  cooperation tax an  industries  or  firms  .Cooperative  tax  will increase the  cost  of production and consequently  the supply  of the good into  the market will reduce since  production will be  down all  things being  equal .

 

 

7.Political factors :

During  a period  of political  stability , move  goods  are  produced  and supply  but when  there  is  political  instability  such  as  wars  and social wrest  less goods  are produced  and supply

 

8.Time  factors :

This  mostly  affect agricultural products  .The supply  of agricultural  product  will  increase  in  a  long run than in a short  run  since  it takes  time to  produce  agricultural products

 

9.The  consumption  pattern :

When there is a change  in the  consumption  pattern  in favor  of a  product,  the supply   of the  product will  increase   , On  the  other hand a change  in the consumption  pattern in disfavor     of  a  commodity  will  reduce  supply  of the  commodity   into  the market.

 

 

 

 

 

 

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