Factors affecting supply of a commodity. 11 essential Factors influencing the supply of a commodity 2022-10-18

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The supply of a commodity refers to the quantity of a particular good or service that is available for purchase at a given time. There are several factors that can affect the supply of a commodity, including the cost of production, the availability of raw materials, technological advances, and the number of producers in the market.

One of the most significant factors that can affect the supply of a commodity is the cost of production. When the cost of production increases, it can make it more expensive for producers to produce the commodity, which may lead to a decrease in the supply. This can be caused by a variety of factors, such as an increase in the cost of raw materials, labor, or energy. On the other hand, if the cost of production decreases, it may make it more profitable for producers to produce the commodity, leading to an increase in the supply.

The availability of raw materials is another factor that can affect the supply of a commodity. If the raw materials needed to produce a particular commodity are scarce or in high demand, it may lead to an increase in the cost of production, which can in turn decrease the supply of the commodity. On the other hand, if the raw materials needed to produce a commodity are readily available and in low demand, it may lead to a decrease in the cost of production, which can increase the supply of the commodity.

Technological advances can also have an impact on the supply of a commodity. As technology improves, it may become easier and more efficient to produce certain goods, leading to an increase in the supply of that commodity. Conversely, if technology becomes outdated or less efficient, it may lead to a decrease in the supply of the commodity.

Finally, the number of producers in the market can also affect the supply of a commodity. If there are many producers in the market, there may be increased competition among them, leading to an increase in the supply of the commodity as each producer tries to meet the demand. On the other hand, if there are few producers in the market, there may be less competition, leading to a decrease in the supply of the commodity.

In conclusion, there are several factors that can affect the supply of a commodity, including the cost of production, the availability of raw materials, technological advances, and the number of producers in the market. Understanding these factors can help producers and consumers make informed decisions about the supply and demand of goods and services.

Factors Affecting Supply of Commodity and opportunities.alumdev.columbia.edu

factors affecting supply of a commodity

Difficulties in transport may cause a temporary decrease in supply as goods cannot be brought in time to the market place. Similarly, with the rise in cost of production the supply curve tends to shift downward. However, technological degradation or complex and out-dated technology will increase the cost of production and it will lead to decrease in supply. Therefore he would release certain amount of the product, say around 50 kgs in the market, but would not release the whole amount. Kharif crops, for example, are best cultivated in the summer, whereas Rabi crops are best grown in the winter. Besides, maximum sales, maximum output and maximum employment are also the goals of the firm. The more resilient the product is, the more it is affected by the variations in rates.

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What are the factors affecting the supply of commodity?

factors affecting supply of a commodity

INDIVIDUAL SUPPLY FUNCTION Individual supply function refers to the functional relationship between individual supply and the factors affecting individual supply. Among the factors that can cause a change in supply are changes in the costs of production, improvements in technology, taxes, subsidies, weather conditions, health of livestock and crops. Aside from that, the price of alternatives and complementary commodities may have an impact on a product's supply. Oxytocin: Oxytocin is a hormone released from anterior pituitary gland in animals as well as human being. Further, if the stock of goods can be easily stored, its supply would be relatively elastic and vice versa. Short term growth is affected by commodity prices, political instability, and the weather.

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What are the factors that affect quantity supplied of a commodity?

factors affecting supply of a commodity

Increase in the prices of other goods makes them more profitable in comparison to the given commodity. Most of the inventions and innovations in chemistry, electronics, atomic energy etc. For example, the production of fertilizers and good quality seeds increases the production of crops. Most of these are obtained from animal and plants waste products. The price of factors of production: With the rise in the price of factors of production the cost of production rises.

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What Factors Affect The Supply Of A Commodity?

factors affecting supply of a commodity

By-product is mostly the automatic outcome when the main product is produced. Thus, the way of supplying the light is called composite supply. There is hence a direct relationship between demand and the price of a substitute good. The law of supply states that a higher price leads to a higher quantity supplied and that a lower price leads to a lower quantity supplied. Firms can define an optimum function based on their requirements.

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What are the 5 factors that affect supply?

factors affecting supply of a commodity

A better and more modern technology enhances a product's production, resulting in an increase in the product's supply. An increase in the selling price will cause existing producers to increase their production and will attract new producers into the market. As a result, the firm shifts its limited resources from production of the given commodity to production of other goods. They are known as the determinants of supply. Transport is always a stumbling block to product supply, since items are not delivered on time owing to insufficient transportation infrastructure. Sometimes, government imposes restrictions on some commodity in order to regulate the price or planned availability on the market.

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11 essential Factors influencing the supply of a commodity

factors affecting supply of a commodity

Read also Price of Commodity An elevation in the price of the product leads to rise in the amount supplied in the market. In this supply is not made according to the demand of purchasers but as per availability of the goods. Cost of Production: If there is a rise in the cost of production of a commodity, its supply will tend to decrease. Market Supply: Market supply is also called very short period supply. It also considers other variables which influence the supply situation in an economy.

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Supply of a Commodity: Meaning, Factors Affecting and Types

factors affecting supply of a commodity

The supply also changes due to the changes in these other factors. In the short run, a firm cannot easily change its output level, so supply is inelastic. However, with change in trend, some firms are willing to supply more even at those prices, which do not maximise their profits. Supply of a commodity extends or contracts due to the influence of the law of supply. The objective of such firms is to capture extensive markets and to enhance their status and prestige. This law states that more quantity of a commodity is supplied at higher prices and less quantity at lower prices. Or A supply function shows the functional relationship between the quantity supplied and the factors on which supply depends on.

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12 Factors Determining The Supply Of A Commodity

factors affecting supply of a commodity

This decreases the profitability. Arciaga Search About: 1. What is the effect of price on supply? Calculate the total change in percentage of the quantity of goods shipped. On the other hand, tax concessions and subsidies increase the supply as they make it more profitable for the firms to supply goods. On the other hand, decrease in prices of factors of production or inputs, increases the supply due to fall in cost of production and subsequent rise in profit margin. If there is a decrease in supply of goods and services while demand remains the same, prices tend to rise to a higher equilibrium price and a lower quantity of goods and services. The supply of an item is influenced by various factors that include price, cost and techniques of production, weather conditions and government policies.

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6 Factors Affecting the Supply of a Commodity (Individual Supply)

factors affecting supply of a commodity

Thus, stock is the determinant of supply. The supply function in economicsis of utmost importance to businesses. So even at the rising prices, quantity supplied cannot be increased. Advanced and improved technology reduces the cost of production, which raises the profit margin. For example, increase in the price of other good say, wheat will induce the farmer to use land for cultivation of wheat in place of the given commodity say, rice. In capitalist countries where there is inequality of income, the demand pattern is different. All these resources go to make the supply of light.


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