Factors Affecting Supply
The various factors affecting supply of a commodity are:
(i) Own Price of a Commodity (Px): There is a direct relationship between own price of a commodity and its quantity supplied. Higher the price, higher the quantity supplied and vice-versa.
(ii) Price of Related Goods (PR): The supply of a particular commodity is inversely related with the price of its substitute commodities, such as the supply of wheat will fall with rise in the price of ice, i.e., supply decreases and vice-versa.
In case of complementary goods, supply is directly related with the price of complementary goods. With rise in price of petrol, supply of cars will rise, i.e., supply increases and vice-versa.
(iii)**Goal of the Firm (G):**The goal of the firm is to maximise profits, more quantity of the commodity will be offered only at a higher price. On the other hand, if goal of the firm is to maximise sales, more will be supplied even at the same price and same will be supplied even at a reduced price. Sales maximiser firm supplies greater quantity than a profit maximiser firm.
