Determinants of Supply

What factors influence production decisions the most?

• need to maximize profit & costs of production
• costs of production & the availability of substitutes
• need to maximize profit and the consumers' price expectations
• law of diminishing returns and total costs

The picture shown illustrates the:

• Law of DEMAND
• Law of SUPPLY
• Determinants of supply
• Determinants of demand

What is the difference between a change in supply, and a change in quantity supplied?

• A change in price causes a change in quantity supplied.  One of the determinants of supply causes a change in supply
• A change in price is caused by Supply
• Supply is not influenced by anything
• Prices of goods are set by the government authority in a mixed market economy

A change in supply, caused by one of the determinants of supply, causes:

• the entire supply curve to shift to the right or left
• no changes to the supply curve
• movement along the supply curve
• none of the above

Which of the following is NOT one of the determinants of supply?

• Change in cost of resources/inputs
• Change in number of sellers
• Substitutes
• Change in technology

Identify the correct determinant of supply:
Example: If the cost of electricity used to power an automotive factories falls, the supply of cars in the market increases

• Cost of resources
• Number of sellers
• Change in expectations
• Change in technology

Identify the correct determinant of supply.
Example: If the government requires factories to reduce pollution, complying will initially increase costs of production in the market and reduce supply.

• Government regulation
• Cost of resources
• Change in education 
• Change in technology

Identify the correct determinant of supply.
Example: As the demand for DVDs decreased due to consumer preference for streaming movies, the market price for DVDs fell. This lower market price caused sellers to leave the DVD market and supply decreased. 

• Government regulation
• Change in number of sellers
• Change in income
• Change in expectations

Identify the correct determinant of supply.
Example: If airlines expect prices for airline tickets to fall in September when families are less likely to travel due the school calendar, they will supply more during the summer months when they can charge higher fares.

• Change in income
• Change in number of sellers
• Expectations
• Change in technology

Identify the correct determinant of supply.
Examples: When auto manufacturer were able to implement robotics on the production line, automobiles were produced more quickly and at a smaller cost per unit. This allowed the industry to supply more cars.

• Government regulations
• Expectations
• Number of sellers
• Change in technology