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Dr.K.Baranidharan
Present by…
Engineering
Economics &
Financial
Accountingment
Ee&fa
218 August 2013
DETERMINANTS
OF SUPPLY
 It is relevant to know the factors
which determine supply of a
product:
 1.Price of the commodity
 2.Cost of Productio...
1.Price of the commodity
 The most important determinant
of supply is price,
 Supply is positively related to
price of t...
2.Cost of Production
 Production requires the transformation of
various inputs and involves cost that
includes price of i...
Example:
 A company manufactures cotton shirts
 If the price of the raw cotton rises, this will
lead to rise in the cost...
3.State of Technology
 Technology bears a positive
relationship with supply.
 An improved technology reduces
cost of pro...
4.Number of Firms
 With increase in the number of
producer of a particular product,
the supply of the product in the
mark...
5.Government Policies
 Government Policies related to taxes
and subsidies on certain products
also have been an effect on...
Dr.K.Baranidharan
THANK YOU
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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

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

  1. 1. Dr.K.Baranidharan Present by…
  2. 2. Engineering Economics & Financial Accountingment Ee&fa 218 August 2013
  3. 3. DETERMINANTS OF SUPPLY
  4. 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. 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. 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. 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. 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. 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. 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. 11. Dr.K.Baranidharan THANK YOU

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