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Determinants of Supply

Definition

Determinants of supply are factors that influence the quantity of a good or service that producers are willing and able to sell at different prices. These determinants can include input prices, technology, number of sellers, expectations, and government regulations.

Analogy

Think of determinants of supply as ingredients in a recipe. Just like different ingredients affect the final taste and appearance of a dish, determinants of supply impact the quantity that producers are willing to offer in the market.

Related terms

Input Prices: Refers to the cost of resources needed to produce a good or service. For example, if the price of steel increases, it will increase production costs for car manufacturers.

Technology: Refers to advancements in machinery and processes used in production. A new machine that speeds up production can lead to an increase in supply.

Number of Sellers: The total count of producers selling a particular product within a market. An increase in the number of sellers can result in higher overall supply.