What Are the Main Determinants of Supply

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The Answer is Factors that affect supply include the costs of production. As the costs of producing a good change, this will influence how much of a good a producer is willing to provide. Other factors include, the profitability of a product and any other products a firm sells. A firm will want to produce and sell those products that will make them the most money and so this will influence their supply decisions. This also links in with the profitability of goods in joint supply. Random shocks will also affect their supply decisions - i.e. oil prices, as well as their expectations. What do they think will happen to the price of the good they're selling in the future? If they think it may go down in the future, then they will sell more of it now to achieve the highest revenue possible. If they think they will be able to sell it for more in the future, then they will hold back now and wait until the price does rise.

What Are the Main Determinants of Supply

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