What Factors Affect The Supply Of A Commodity?

There exist several factors, which can affect the supply of a commodity. All of the factors are not equally applicable in all the cases. Following are the major contributing factors, besides the unforeseen natural calamity and war, affecting the supply of a commodity:

(a) Production. Production is the major factor that controls the supply of a commodity. If there is less production or no production then certainly the supply of that commodity gets disturbed. With enough production, the item becomes easily available in the every store of the market.

(b) Demand. Demand for a particular commodity necessitates arrangement for more production and supply to the market. (I don't know who has invoiced for more human being forcing the production to put at the war footing!).

(c) Cost. If cost is reduced, demand becomes more and thereby necessitating more supply of the commodity. Do you purchase more potato when the rate goes high? Then why to supply more?

(d) Transport system. A good transport system helps increasing the supply. If there is inferior infrastructure for transportation, supply gets reduced.

(e) Govt. orders and regulations. Sometimes, government imposes restrictions on some commodity in order to regulate the price or planned availability on the market. Supply of the commodity gets regulated accordingly. (Govt. does it frequently to regularize any scam, etc.)

(f) Un-ethical business practices. Dishonest businesspersons are also affecting greatly in controlling the supply chain of any commodity.

.   1. Introduction of new technology
2 if the demand of the commodity increases
3 if there is no substitue, monopoly is an advantage
if income increases

Supply refers to the quantity of a commodity offered for sale at different prices during a certain period of time. The supply of an item is influenced by various factors that include price, cost and techniques of production, weather conditions and government policies. A change in any one of the above mentioned factors would affect the supply. However, price is the most dominant factor. Thus the change in supply is categorized in the following two types

Extension & Contraction: This effect results only from a change in price of a commodity. When the price of an item rises, more quantity is offered for sale. This phenomenon is called extension. Contraction in supply occurs when a fall in price reduces the quantity offered for sale.

Rise and fall: Changes due to factors other than price are called the rise and fall of supply. An increase in the cost of inputs may cause a fall in the supply. For example, a change in the cost of fertilizers may result in reduced supply of wheat. An improvement in technology permits more unit output in the same cost. Factors such as weather conditions and wars affect production and consequently the supply of an item is affected