Theory question 105
Theory of Supply(a) What is supply?
(b) Describe any five determinants of supply.
Show the model answer
Model answer
(a) Supply is the quantity of a commodity that producers are willing and able to offer for sale at a given price at a particular time.
(b) Any five: price of the commodity; cost of production (prices of factors); technology; prices of other (related) commodities; government policy (taxes, subsidies); number of producers; weather and natural factors; goals of the firm; expectations of future prices; transport and storage facilities.
Explanation
Say how each factor raises or lowers supply.