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 Form 3 Business Studies: Demand and supply online lessons

Meaning of supply and factors which influence supply of product

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Answer Text:
Meaning of supply.
-Supply refers to the quantity of goods and services that sellers are willing and able to bring to the market at various prices during a specific period of time.
Factors which influence supply of product:
-Price of product: the higher the price, the higher the supply and vice versa.
-Price of related commodities: for goods that are jointly supplied, an increase in price of one increases the supply of the other and vice versa..
-Price of factors of production: An increase in the price of factors of
production will make producers reduce production hence reducing the supply of goods.
-State of technology: improved state of technology will increase production hence increasing the supply of goods.
-Government policy: government policies such as taxation may encourage or
discourage production and supply of certain goods.
-Expectation of future changes in price: expected fall in price leads to increase in current supply and vice versa.