Answer the following (any three): Explain any four determinants of supply.

Answer: Supply of a commodity depends on several factors besides its price:

1. Price of the commodity: Other things remaining constant, the higher the price, the larger the quantity supplied.
2. Cost of production: A rise in the cost of raw materials, wages or power reduces profit and supply; a fall in costs raises supply.
3. State of technology: Improved technology lowers costs and increases supply.
4. Government policy: Taxes reduce supply; subsidies and incentives increase supply.
5. Natural conditions: Supply of agricultural goods depends on rainfall and climate; good monsoons increase supply.
6. Prices of other goods: If the price of another good rises, producers may shift resources to it, reducing the supply of this good.
7. Expectations about future prices: If sellers expect prices to rise, they hold back stocks and current supply falls.