Non-Price Determinants of Supply

 Input Costs, including Technology (factors of production,

including raw materials, electricity, wages; lower costs
generally go hand-in-hand with higher profits, causing
producers to supply more product at each price—moves
curve to right)
 Government Influence
o Subsidies—payments to private business by gov’t.
Subsidies and taxes have opposite effects on supply,
since subsidies can reduce a business’s production
costs—shift curve to right.
o Taxes—payments to gov’t to help fund gov’t services.
Since taxes add to company’s production costs, lower
taxes reduce costs and higher taxes increase costs of
doing business….
o Regulations—rules about how companies conduct
business. Strict regulations increase production costs
—shift curve to left.
 Future Expectations: Producers make decisions based on
expected future income. If demand is expected to increase,
supply might shift to right, and vice versa.
 Number of Suppliers: tends to increase supply and lower
prices—shift curve to right.