What are the factors that influence supply?

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jgrodsky | Middle School Teacher | (Level 2) Adjunct Educator

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There are many factors in our world that affect and influence supply. First, a decrease in costs of production means business can increase supply and decrease the price. Costs might decrease because of lower wages, lower costs for raw materials, lower costs for transportation of goods. Another factor causing an increase of supply is an increase in producers of a good. Supply might also increase if the ability to produce more increases as in there might be a new factory built or building an addition to an existing factory. Next, an increase might occur because of an increase of a similar product. An increase in wheat supply might cause an increase in cereal supply. Climate conditions very often could cause a change in supply as well as improvements in technology used. Lastly, changes in government subsidies and lowering taxes might cause cost of goods to decrease allowing for there to be greater production and increased supply. 

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