Microeconomic supply side factors that
shift the supply curve
• Prices of inputs/factors of
production/resources: Each good or service
that is produced requires resources
(land/labour/capital). The supply curve will
shift when the costs of these resources/inputs
change.
Microeconomic supply side factors that
shift the supply curve
• Productivity growth: productivity is a
measure of the efficiency of production
(output/inputs). An increase in productivity
means that for a given quantity of resources you
can now produce more.
• An increase in productivity will decrease the
cost per unit of production.
Microeconomic supply side factors that
shift the supply curve
• Technological change: new technology will
generally increase the productivity of existing
resources. This means that a greater volume of
goods and services will be able to be produced.
• The use of new technology will decrease the cost
per unit of production.
Microeconomic supply side factors that
shift the supply curve
• Climatic conditions: most goods and services
rely upon the nature for the provision of the raw
materials ether directly or indirectly.
• Some agricultural products are heavily
dependent upon climatic conditions.
Microeconomic supply side factors that
shift the supply curve
• Rates of company and indirect
taxes/levies on producers: higher company
or indirect taxes reduce the retained profit of
firms so they are likely to decrease supply.
Microeconomic supply side factors that
shift the supply curve
• Level of government assistance such as
tax concessions or subsidies: government
assistance helps cover some of the cost of
production which allows the business to increase
supply.