GENERAL KNOWLEDGE

Detailed explanation-1: -The price of inputs or the factors of production such as land, labor, capital, and entrepreneurship also determine the supply of the goods. When the price of inputs is low the cost of production is also low. Thus, at this point, the firms tend to supply more goods in the market and vice-versa.

Detailed explanation-2: -The supply of a commodity is affected not only by price but by other factors also which include: (i) prices of other commodities, (ii) prices of factors of production, (iii) objectives of the producer, and (iv) production technology.

Detailed explanation-3: -Price is the most important factor influencing the supply of a commodity. More is supplied at a lower price and less is supplied at a higher price.

Detailed explanation-4: -The Price of Inputs. In addition to the price of the product being the main factor as stated in the Law of Supply, the price of production inputs also plays a part. The Current State of Production Technology. The Producer’s Expectations. The Number of Producers in the Market.

Detailed explanation-5: -Production cost: Since most private companies’ goal is profit maximization. Technology: Technological improvements help reduce production cost and increase profit, thus stimulate higher supply. Number of sellers: More sellers in the market increase the market supply. Expectation for future prices: