Determinants of The Shift in The Supply Curve

Filter Course


Determinants of The Shift in The Supply Curve

Published by: sadikshya

Published date: 02 Jul 2021

Determinants of The Shift in The Supply Curve in Grade 12 - Economics

Determinants of The Shift in The Supply Curve

The various determinants of the shift in the supply curve as follow.

  • Price of the goods.
  • Price of related goods.
  • Price of factor production.
  • Change in technology.
  • Expected change in price.
  • Natural factors.
  • Means of transport and communication.
  • Taxation policy of the government.

Price of the goods

The supply of goods depends on their price. There is a direct and positive relationship between the price of goods and their supply.

Price of related goods

The supply of particular goods is inversely related to the price of other goods such as the supply of wheat with a fall with the rise in the price of rice. This is due to the fact that a rise in the price of rice will increase producers to produce more rice consequently area under wheat activation will be decrease and supply will decline.

Price of a factor of production

With the rise in the price of a factor of production, the cost of production also rises which results in an increase of supply and vice versa.

Change in technology

The change in technology or new discoveries brings a reduction in cost and an increase in production. This will increases the level of supply.

Expected change in price

If the producer expected an increase in the price, there will withdraw goods from the market consequently, Supply will reduce if the price expected to fall in future the supply will naturally increase.

Natural factors

The supply of goods is a part of goods produces. It means that more production of goods will result in its more supply and vice-versa. Agricultural production depends upon various natural factors such as rain, fertility, climatic condition, etc. production may be adversely affected due to famine, heavy rain, drought, etc.

Means of transport and communication

An adequate supply of a commodity is maintained if the means of transport and communication are developed. The scarcity of goods will be experienced in the domestic market if the means of transport and communication are not properly developed.

Taxation policy of the government

The production of the commodity is discouraged if heavy-duty on its production on is imposed. In the same way, tax concession encourages producers to increase supply.