Question

Which of the following can be treated as determinants of supply?

• A. Climatic changes
• B. Changes in producer or seller expectations
• C. Changes in cost of factor inputs such as land, labour, capital, raw materials etc.
• D. All of above

Answer 1

The correct option is D All of above

Climatic changes : Climatic conditions directly affect the supply of certain products. For example, the supply of agricultural products increases when monsoon comes on time. However, the supply of these products decreases at the time of drought. Some of the crops are climate specific and their growth purely depends on climatic conditions. For example Kharif crops are well grown at the time of summer, while Rabi crops are produce well in winter season.

Changes in producer or seller expectations : The expectations that sellers have concerning the future price of a good, which is assumed constant when a supply curve is constructed. If sellers expect a higher price, then supply decreases. If sellers expect a lower price, then supply increases. Sellers' expectations are one of five supply determinants that shift the supply curve when they change.

Changes in cost of factor inputs such as land, labour, capital, raw materials etc. : The inputs, such as raw material man, equipment, and machines, required at the time of production are termed as factors. If the factors are available in sufficient quantity and at lower price, then there would be increase in production.

$\therefore$ All above factors effects the determinant of supply.