What are the five determinants of supply?

Aside from prices, other determinants of supply are resource prices, technology, taxes and subsidies, prices of other goods, price expectations, and the number of sellers in the market.

What is a basic principle of the law of supply?

The law of supply is a fundamental principle of economic theory which states that, keeping other factors constant, an increase in price results in an increase in quantity supplied. In other words, there is a direct relationship between price and quantity: quantities respond in the same direction as price changes.

What are the six non price determinants of supply?

Terms in this set (14)

  • Income (demand)
  • Consumer Expectations (demand)
  • Population (demand)
  • Consumer tastes and advertising (demand)
  • Complimentary goods / related goods (demand)
  • Substitute goods / related goods (demand)
  • Rising cost / input costs (supply)
  • Technology / inputs costs (supply)

What are the main determinants of supply of a commodity?

Factors Affecting Supply:

  • Price of the Commodity: Price is the most important factor influencing the supply of a commodity.
  • Seller’s Expectations about the Future Price:
  • Nature of Goods:
  • Natural Conditions:
  • Transport Conditions:
  • Cost of Production:
  • The State of Technology:
  • Government’s Policy:

How do you remember the determinants of supply?

TPRENT is a mnemonic to help you remember them! Imagine that you’re renting out a teepee and you’ll remember the determinants of supply.

What are non price determinants of supply?

The non-price determinants of supply include: Changes in costs of factors of production (land, labour, capital, entrepreneurship). As there is an increase in costs of production → the supply shifts to the left, meaning there would be less supply, or in other words you would have to pay more for the same quantity.

What’s an example of law of supply?

The law of supply summarizes the effect price changes have on producer behavior. For example, a business will make more video game systems if the price of those systems increases. The opposite is true if the price of video game systems decreases.

What factors influence this elasticity?

Various factors which affect the elasticity of demand of a commodity are:

  • Nature of commodity: Elasticity of demand of a commodity is influenced by its nature.
  • Availability of substitutes:
  • Income Level:
  • Level of price:
  • Postponement of Consumption:
  • Number of Uses:
  • Share in Total Expenditure:
  • Time Period:

What is an example of a change in supply?

A change in supply happens when the suppliers of a product have to work in different conditions. If the situation for suppliers changes, a different quantity of a product will be on sale at each price. For example, if there is a lot of good weather, the rice crop in a country may increase.

Which is the best example of the law of supply?

Which of the following is the best example of the law of supply? A sandwich shop increases the number of sandwiches they supply every day when the price is increased.

What are the determinants of supply quizlet?

Determinants of Supply

  • change in resource prices.
  • change in technology.
  • change in taxes and subsidies.
  • change in the prices of other goods.
  • change in expectations.
  • change in the number of sellers.

What can cause an increase in supply?

An increase in supply can be caused by:

  • an increase in the number of producers.
  • a decrease in the costs of production (such as higher prices for oil, labor, or other factors of production).
  • weather (e.g., ideal weather may increase agricultural production)

What is the main determinant of the price elasticity of supply quizlet?

The main determinant of elasticity of supply is the: amount of time the producer has to adjust inputs in response to a price change.

How do you interpret a supply curve?

The supply curve will move upward from left to right, which expresses the law of supply: As the price of a given commodity increases, the quantity supplied increases (all else being equal). Note that this formulation implies that price is the independent variable, and quantity the dependent variable.

What factor is the greatest influence on elasticity of supply?


A shift in the demand curve means a change in demand at every price
What is a company’s total revenue? the amount a company receives for selling its goods
What factor has the greatest influence on elasticity and inelasticity of supply? time
Which of the following is a fixed cost for a store? rent

What are the four determinants of supply?

changes in non-price factors that will cause an entire supply curve to shift (increasing or decreasing market supply); these include 1) the number of sellers in a market, 2) the level of technology used in a good’s production, 3) the prices of inputs used to produce a good, 4) the amount of government regulation.

What is supply which factors influence supply?

Supply refers to the quantity of a good that the producer plans to sell in the market. Supply will be determined by factors such as price, the number of suppliers, the state of technology, government subsidies, weather conditions and the availability of workers to produce the good.