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.