#commerce/y10/ebe
Main factors that impact the supply of a good / service §
Cost of production §
- Suppliers pay for a variety of things, including raw materials, labour (staff), rent and electricity / gas / internet.
- Suppliers put most of their efforts into producing the most cost effective product.
Productivity / efficiency §
- Productivity refers to the amount that is produced, and efficiency to the effectiveness of turning resources into products with minimal waste.
- As productivity and/or efficiency increase, the supply will also increase.
- Efficiency and productivity can increase because: more workers are employed, workers become better at their jobs, and / or new technology is used.
Prices of other goods / services §
- If the price of the substitute increases, customers are more likely to want the cheaper alternative.
- Therefore suppliers of the cheaper good will produce more to maximise profit.
- If the price of the alternative decreases, customers will prefer that good, so you will supply less of your more expensive good.
The number of suppliers §
- As more suppliers enter the market producers will supply less of their product because not as many people will buy it.