Factors leading to change in supply

  • Created by: ms200206
  • Created on: 13-04-21 17:01
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  • changes in supply
    • changes in cost of production
      • these include raw materials, rent, machinery
      • if production costs rise, supply will decrease
        • this is because profits will be reduced
      • increase in costs= supply curve shifts to left
    • new technology
      • more efficient and helps lower production costs
        • encouraging firms to offer more for sale
        • supply curve shifts to right
    • indirect taxes
      • represent a cost to firms
        • supply curve shifts to left
    • external shocks
      • WORLD EVENTS- e.g. the global financial crisis in 2008 led to a 'credit crunch'
      • WEATHER- agricultural products can be affected and certain severe conditions can disrupt transport of goods
      • increase in interest rates raises costs
      • price of related goods
        • if this increases, supply of other products may decrease
    • government subsidies
      • subsidies may be given to firms to encourage production of a certain product
        • e.g. renewable energies industry is funded in attempt to cut greenhouse gases
        • supply curve shifts to right


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