Question 1 - 3 Marks Questions - Chapter 1 Class 7 Economics - Introduction to Demand and Supply - Economics

What are the factors that affect supply?

Answer:

Answer by Student

Some factors that affect supply are:

• Cost of production : This is how much money it takes to make a product. It includes the costs of workers, materials, machines, and other things. If the cost of production goes up, the supply will go down. If the cost of production goes down, the supply will go up. For example, if the price of milk goes up, it will cost more to make ice cream, so the supply of ice cream will go down.
  
  
• Number of sellers : This is how many people or businesses are making and selling a product. If the number of sellers goes up, the supply will go up. If the number of sellers goes down, the supply will go down. For example, if more ice cream shops open in a town, the supply of ice cream will go up.
  
  
• Technology : This is how good and fast the machines and methods are for making a product. If technology gets better, the supply will go up. If technology gets worse, the supply will go down. For example, if a new machine can make ice cream faster and cheaper, the supply of ice cream will go up.
  
  
• Expectations : This is what people or businesses think will happen in the future. If they expect higher prices in the future, they may keep some of their products now to sell later. This will make the current supply go down. If they expect lower prices in the future, they may sell more of their products now. This will make the current supply go up. For example, if ice cream shops expect a hot summer, they may keep some of their ice cream in storage to sell later when people want more ice cream. This will make the current supply of ice cream go down.

*Write any three points