(a) What is supply? [5 marks]
(b) Describe any five determinants of supply. [15marks]
Explanation
(a)Supply refers to the quantities of any commodity that producers are able and willing to offer for sale at alternative prices over a given period of time
(b) Factors that determine supply.
(a) The price of the commodity: The higher the price, the greater the supply and vice versa.
(b) The number of producers Usually the larger the number of producers the greater the supply
(c) Weather conditions - especially in agricultural production
(d) Government policy that may or may not encourage production e.g. taxation, subsidy, etc
(e) Cost of production - A rise in cost of production will reduce supply and vice versa
(f) Time lag - It takes some time in certain productive activities to effect changes in the market With regard to supply e g in increasing the supply of cocoa or ships if their prices rise, it takes years to adjust supply
(g) Technological breakthrough: New inventions or innovations may greatly increases productivity and hence supply.
(h) price of other commodities - a change In the price of other commodities may divert production efforts into those areas.
(i) Mobility of factors of production.