Factors Affecting the Supply of Goods

The offer is the total amount of goods that are willing to be offered at certain price levels and at certain times. If the price goes up, the amount of goods on offer increases. Likewise, when prices fall, the amount of goods offered also decreases or decreases Like buyers, does the seller also take into account only the price factor in preparing the bid list? Of course not. In fact, many factors influence the seller’s offerings. But when formulating an offer, simply by connecting the price and quantity of goods and services offered. Factors other than the price are considered unchanged, however the things that affect the supply of goods include:

Technology advances

Technological advances can alter input combinations and the type of input required in the production process. Improved technology always means that the number of required inputs is less or the cost of the required inputs is reduced. If production costs are lower, manufacturers are encouraged to increase output. Therefore, an increase in production technology will push the demand curve to the right.

Production cost

Rising production costs also play an important role in influencing the supply of goods and services from producers. For example, increasing workers’ wages by increasing production costs. If the cost increase is very high, manufacturers tend to reduce production and thus lower the supply. Conversely, if one day the cost of raw materials for example decreases, producers can buy more raw materials to produce goods and services. Therefore, the offer increases.

Inventories of production facilities

Economic problems arise because of unequal production resources compared to what is needed. So it is with production. Production will be disrupted if the supply of production facilities is lacking. Supply of rice in certain areas tends to decline as many agricultural lands are converted into industrial areas.

Increased number of producers

If sales of a product are profitable, then this will encourage new investors to enter the business. For example, if citrus farmers are considered to be profitable, many others are turning the profession into citrus farmers. With the addition of these new producers, citrus offers will increase. The supply curve shifts to the right.

Natural events

Nature for human life does not always provide benefits, but it can also bring harm. In the event of natural disasters such as floods or prolonged drought, the yield of rice is reduced drastically. Events like this will reduce the supply of goods. Expectations or expectations of producers. Like consumers, producers also have expectations or expectations of future situations. If producers estimate that the next year’s economic situation will improve, then at this time they will produce more goods and services for sale. Conversely, if they predict that the economic situation will deteriorate in the future, they are less likely to increase production.

Prices of other goods and services

The prices of other goods and services are complementary and some are substitutes. If the price of PC computers increases, then the supply of PC computers is also increasing. This will further encourage manufacturers to increase the supply of mice, printers, computer desks, or various items that complement the computer. Therefore, as computer prices increase, the offer of mice, printers, and computer desks increases, even though the price of these items has not changed. This further causes the supply curve to shift to the right.