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Demand and Supply
Quick questions on Factors affecting supply explained: O-Level Economics
4short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is costs of production?Show answer
The cost of the factors of production, wages, raw materials, rent and so on, is the main determinant. If costs rise, it is dearer to make each unit, so firms supply less at every price and the curve shifts left. If costs fall, supply rises and the curve shifts right.
What is technology?Show answer
Better technology lets firms make more output from the same resources, lowering the cost per unit. This raises supply, shifting the curve right. A new, faster machine or a better farming method are examples.
What are number of firms?Show answer
If more firms enter the market, total supply rises and the curve shifts right. If firms leave the market, supply falls and the curve shifts left.
What is prices of other goods a firm could make?Show answer
If a firm can make two goods with the same resources, a rise in the price of one makes it more attractive to produce, so the firm switches resources toward it and supplies less of the other. For example, if the price of wheat rises, a farmer may grow more wheat and less barley, reducing the supply of barley.
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