Question

Explain three factors causing a shift of the supply curve.

Answer 1

1. Technology: As technology advances, the cost of production decreases. As a result, the supply curve moves to the right. On the other side, if outdated and subpar technology is used in manufacturing. As production costs rise, supply will drop.
2. Number of Firms: The more firms there are, the larger the market supply at the same price. If the number of enterprises falls, the market supply of the product will diminish.
3. Price of inputs: If input prices fall, the cost of production falls, resulting in an increase in supply. In contrast, an increase in input costs will raise the cost of production, reducing market supply.