Factors Affecting Supply

• Price & Cost of FoP


  The market price influences producers' abilities to supply products in the market.

  • A fall in costs of FoP allows firms to supply more of a good
  • A rise in costs of FoP leads to a decrease in supply
• Expected Future Prices

  • If suppliers believe the price will rise in the future, the supply of goods/services will increase
  • Possibility of increased profits arise from supply of the good
  • The reverse is true if future expected prices are expected to fall
• Number of Suppliers

  The actual quantity of goods available is an overall limiting factor that affects supply.
• Technology

  Improvements in technology:

  • lower production costs and allow more firms to supply more goods at a given price
  • allows firms to readjust production runs to quickly accommodate changing demand patterns