Question

State any two factors determining supply.

Mention two factors which influence supply.

Answer 1

Two key factors that affect supply are:

1. Price of the Commodity: This is the most important factor influencing supply. When the price of a good increases, producers are encouraged to supply more to earn higher profits. Conversely, if the price drops, they supply less.
2. Future Expectations: If sellers anticipate a price increase in the near future, they may hold back current supply in hopes of earning more later. This expectation can reduce present supply in the market.