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Determinants of supply (also known as factors affecting supply) are the factors which influence the quantity of a product or service supplied. The price of a product is a major factor affecting the willingness and ability to supply. Here we will discuss the determinants of supply other than price. These are the factors which are assumed to be constant in law of supply.

Change in the price of a product causes the price-quantity combination to move along the supply curve. However when the other determinants change, the supply curve is shifted.

Factors affecting Supply

Price of the commodity: A rise in price will result in more of the commodity being supplied to the market and vice versa.

Prices of other commodities: For example if it is more profitable to produce LCD TVs then producers will produce more LCD TVs as compared to PLASMA TVs. Thus the supply curve for PLASMA TVs will shift inwards i.e. a fall in supply.

Change in cost of production: Increase in the cost of any factor of production may result in the decrease in supply as reduced profits might see producers less willing to produce that commodity.

Technological advancement: Improvement in technology results in lowering of cost of production and more profits for the producer and thus more supply of that commodity.

Climate: Climate and weather conditions affect the supply of commodities especially agricultural goods.



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