Factors Affecting Supply - SS1 Economics Past Questions and Answers - page 1

3 factors that affect supply and explain how they can shift the supply curve include:

• Input Prices: The price of inputs, such as labor, raw materials, and energy, can affect supply. When input prices increase, the cost of production increases, leading to a decrease in supply. When input prices decrease, supply increases, as the cost f production decreases.

• Natural Disasters: Natural disasters, such as floods, earthquakes, and hurricanes, can disrupt production and supply chains. In such events, the supply of goods and services is often reduced, leading to higher prices.

• Government Policies: Government policies, such as taxes, subsidies, and regulations, can impact supply. For example, subsidies to producers can lower their production costs, leading to an increase in supply. Taxes on production or imports can increase the cost of production, leading to a decrease in supply.