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
- more efficient and helps lower production costs
- indirect taxes
- represent a cost to firms
- supply curve shifts to left
- represent a cost to firms
- 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
- subsidies may be given to firms to encourage production of a certain product
- changes in cost of production
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