Question

What happens to the supply of a product in case of a change in the cost of inputs, discovery of an alternate input, depletion of resources, change in weather, disaster, etc.? Discuss in class using examples of diverse goods and services.

Answer 1

• The supply of a product can increase or decrease when production conditions change. If the cost of inputs rises, supply usually decreases because production becomes expensive. If an alternative input is discovered, supply may increase because production becomes easier or cheaper.
•  Depletion of resources can reduce supply, while favourable weather can increase the supply of agricultural goods. Natural disasters such as floods, droughts or earthquakes may reduce production and supply.

Thus, changes in input costs, resources, technology, weather and natural conditions can significantly affect the supply of goods and services.