Non Price Factors of Supply

Question 1

What are the 5 non price factors affecting supply (PENCT)

Answer 1

cost of production, technology, price of other goods, number of sellers, expectations of producers

Question 2

What is the cost of production

Answer 2

prices of resources like labor, capital and raw materials that determine business costs of production

Question 3

how does the supply curve reflect the cost of production

Answer 3

supply curve = increase in production costs which means for a given price the business will decrease its production (Supply curve DECREASES ie shifts to left)

Question 4

what is technology in relation to supply

Answer 4

the knowledge about techniques of production. if tech improves more can be produced from the same quantity of resources therefore cost of production falls

Question 5

how does the supply curve reflect the technology

Answer 5

tech will result in an increase in supply therefore shift to right

Question 6

explain the price of other goods or inputs in relation to supply

Answer 6

producers monitor the changes in prices of goods he is capable of supplying so that he can take advantage of profit opportunities (resources can be used to make more than one good)

Question 7

explain price of other goods with an example

Answer 7

farmers may shift resources from wheat production to wool if wool selling price rises relative to wheat.

Question 8

explain the number of sellers in relation to supply

Answer 8

market supply will increase if new sellers enter market

Question 9

how does the supply curve reflect the number of sellers

Answer 9

shifts to right as supply increases

Question 10

explain the expectations of producers in relation to supply

Answer 10

expectations of suppliers for future conditions
if higher selling price is expected in the future businesses will decrease current supply to make more investments for the future