What r the determinants of supply?
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The determinants of supply are:
1. Price of the commodity: There is the direct relationship between the price and quantity supplied of the commodiy. If the price rises quantity also increases and if the price falls quantity also falls.
2. Price of the related goods: The price of goods depend upon its related goods. For ex: a firm sells tea. if there is rise in the prices of coffee then the firm will reduce the quantity of tea at existing price or it will higher the price at the existing quantity.
3. Number of firms: If the number of firms increases in the market then quantity supply also increases and if firms decrease then supply also decreases.
4. Goals of the firm: If the firm have to maximise profits then more quantity will be offered at higher prices and if it need to maximise sale more will be offered at same price.
5. change in technology: Improvement in technology will reduce cost of production and will result in more supply of commodity at its existing price.
6. Price of factor of production: if factor of production decreases cost of production also decreases accordingly more of the commodity supplied at existing price and vice-versa.