Price of input influencing goods supply
Elucidate how does change in price of input influence the supply of a good.
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Increase in price of input: Increase in price of input is cause of a decrease in the supply of a good because the production cost of a good will increase due to increase in price of input. It will reduced the profit. So producer will decrease the supply of the good.
Decrease in price of Input: Decrease in price of input is a cause of increase in supply because when the price of input decrease the production cost of a good also also decreases. Decrease in cost increases the profit margin. It motivate to producer to increase the supply of the good.
Income of consumer: In case of normal good - Increase in income leads to rise in quantity demanded of a normal good and reduce in income leads to reduction in quanti
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For a particular product how do the determinants of demand affect the price?
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