Determinants of Supply
When factors, other than price, will determine the quantities of a supplied good or service. Here are some factors that determine supply.
  • Production cost: Higher production cost will low profit and hinder supply. Companies goals are to maximize profit. Factors that affect production costs are input prices, wage rates, taxs, ect.
  • Technology: Technological improvements help reduce production and increase profits as well as supplies.
  • Number of sellers: More sellers increase the market supply.
  • Expectations for future prices: If producers expect future prices to increase, they must try to hold onto their inventories and of the products to the buyers in the future and catch a higher price.

  1. "Wiki answes,"accessed Jan 13, 2012, http://wiki.answers.com/Q/Definition_of_determinants_of_supply
  2. "Full collection education," accessed Jan 13, 2012, http://staffwww.fullcoll.edu/fchan/Micro/1determinants_of_supply.htm


Supply: the amount that businesses are willing and able to sell at various prices
Quantity supplied: the amount that businesses are willing and able to sell at a specific price
*A CHANGE IN PRICE CHANGES QUANTITY SUPPLIED, NOT SUPPLY*[1]
  1. ^ Circular Flow Lesson Notes ECON 101, Lecture, Red Deer College, Red Deer, AB, February 2012