Supply Affecting Variables or Supply Determinants - Agribusiness Education and Research International

Introduction:

Supply Affecting Variables or Supply Determinants. Below are the major factors that decide the availability of a commodity:

The price of the commodity in question:

the supply of a commodity depends on the price of that commodity all things being equal if its price is higher than if it is poor, sellers of a commodity are typically able to sell more of it.

Linked goods prices:

The availability of goods often depends on the prices of related goods. If the price of a replacement were to increase, farmers would be forced to shift their energy to the replacement’s output. For example, if the price of tea increases compared to the price of coffee, the land will be used instead of coffee for the cultivation of tea. The coffee supply will diminish. Thus, other items that stay the same are projected to reduce the supply of the commodity as the price of other goods rises. Thus, Supply Affecting Variables or Supply Determinants.

Cost of output or price of factor inputs:

As the cost of production rises due to an increase in the cost of various manufacturing factors, such as raw materials and intermediate goods, availability declines, on the other hand, the price of such factor inputs declines, contributing to large-scale production and, therefore, to an increase in supply.

Improved technology:

progress in manufacturing processes, reducing manufacturing costs and, in essence, increasing supply over time, improvements in technological know-how, inventions, and developments tend to increase the factors’ efficiency and this leads to increased supply upwards.

Means of transport and communication:

if imports from foreign countries are promoted, the development of the means of transport and communication could increase the supply of a specific product. Or it is possible to rush goods from the surplus areas to the depleted areas in the event of short supply. However, if the means of transport established for exporting goods are used, the shortage of goods on the domestic market would emerge.

Aim or Purpose of Businesses:

The supply of a product depends on the aims or priorities of the companies supplying the product. Normally, a company aims to produce full profits. However, often it is possible to encourage individual suppliers to maximize the supply of a product, not because it gives them more money, but because their supply to the consumer is a source of gratitude for them in society. If the goal of the companies were to increase sales or income rather than earnings, the business supply will be greater.

A number of vendors:

The supply depends on the number of vendors as well. The arrival of more vendors will increase and the departure and availability will decrease.

Price expectations:

if the sellers are afraid that the pattern of price fall will also persist in the future, panic-selling will be introduced, the supply will rise there. On the other hand, potential demand forecasts would cause them to maintain the supply and thereby contract the supply.

Agricultural Commodity Availability:

Greater rainfall, improved irrigation, chemical fertilizers, improved seeds, and greater farming practices would inevitably increase supply with respect to agricultural commodities. On the other side, the supply would be decreased by the loss of monsoons, flooding, droughts, explosions, dust storms, rodents, earthquakes, etc.

Political disruptions:

Political disruptions or wars may interrupt or redirect networks, leading to a lack of certain types of commodities, resulting in a reduction in production.

Taxation and subsidies:

The supply of products is also influenced by taxation on manufacturing, purchases, imports, etc. A government can limit the supply of a foreign commodity to promote its production at home by levying high import duties. The government may also ban the manufacturing of such articles for health purposes, e.g. morphine, etc. On the contrary, discounts would decrease prices and lead manufacturers to increase stocks.

Government Policy:

Governments’ policy is also a significant supply determinant. The decline in quotations and tariffs on imported products would open up the market to foreign suppliers and will help to increase production. In comparison, the defense policy will decrease production, while the liberalization policy will increase supply.

Productions Deal:

Often the manufacturers of a commodity form an alliance or enter into an agreement to gain immense income. This allows them to manufacture artificial scarcity, which decreases the availability of the product.

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