EEFA - DETERMINANT OF SUPPLY - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY - DR,K,BARANIDHARAN
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EEFA - DETERMINANT OF SUPPLY - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY - DR,K,BARANIDHARAN

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EEFA - DETERMINANT OF SUPPLY - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY - DR,K,BARANIDHARAN

EEFA - DETERMINANT OF SUPPLY - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY - DR,K,BARANIDHARAN

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  • 1. Dr.K.Baranidharan Present by…
  • 2. Engineering Economics & Financial Accountingment Ee&fa 218 August 2013
  • 3. DETERMINANTS OF SUPPLY
  • 4.  It is relevant to know the factors which determine supply of a product:  1.Price of the commodity  2.Cost of Production  3.State of Technology  4.Number of Firms  5.Government Policies Sri Sairam Institute of Technology 415.07.2013
  • 5. 1.Price of the commodity  The most important determinant of supply is price,  Supply is positively related to price of the commodity.  Relation between price and quantity supplied is the basis if Law of Supply Sri Sairam Institute of Technology 515.07.2013
  • 6. 2.Cost of Production  Production requires the transformation of various inputs and involves cost that includes price of inputs (wages, rents, interest, price of raw materials. etc.,)  The cost of production rises, say due to rise in the price of raw materials, supply will definitely be reduced. Sri Sairam Institute of Technology 615.07.2013
  • 7. Example:  A company manufactures cotton shirts  If the price of the raw cotton rises, this will lead to rise in the cost of production and thereby a reduction in the supply of shirts, unless the suppler can transfer the increase in cost on the consumer by increasing price Sri Sairam Institute of Technology 715.07.2013
  • 8. 3.State of Technology  Technology bears a positive relationship with supply.  An improved technology reduces cost of production per unit of output, enhances productivity and thus increase the supply of the product. Sri Sairam Institute of Technology 815.07.2013
  • 9. 4.Number of Firms  With increase in the number of producer of a particular product, the supply of the product in the market will increase.  New firms will continue to enter the market, thus increasing supply and degree of competition. Sri Sairam Institute of Technology 915.07.2013
  • 10. 5.Government Policies  Government Policies related to taxes and subsidies on certain products also have been an effect on supply as they increase or decrease the cost.  Such effects may be either negative (in case of taxes) or positive (in case of subsidies. Sri Sairam Institute of Technology 1015.07.2013
  • 11. Dr.K.Baranidharan THANK YOU