Stock of a product refers to quantity of a product available in the market for sale within a specified point of time. Consider the following non-price factors when devising a marketing and promotional strategy for your companyâs products and services: As far as changes in demand go, consumer income expectation is one of the most important things to keep an eye on. The seasonal environment drastically affects the demand for given products throughout the year. How Production Costs Affect Supply. that these types of products have an identity that isn’t lost over time. Share Your PPT File. Expansion in the capacity of existing firms, e.g. Refer to the fact that better transport facilities increase the supply of products. For example, availability of cheap labor and raw material nearby the manufacturing plant of an organization would help in reducing the labor and transportation costs. Save my name, email, and website in this browser for the next time I comment. Substitute goods affect the demand of related goods when the supply increases or decreases. There are many factors affecting supply in economics. During a particular season say a rainy season there tend to have higher demand … Demographics . For example, a seller would supply less quantity of a product in the market, when the cost of production exceeds the market price of the product. A supply curve shows how quantity supplied will change as the price rises and falls, assuming ceteris paribus, that is, no other economically relevant factors are changing. Transport is always a constraint to the supply of products, as the products are not available on time due to poor transport facilities. When it comes to non-price factors affecting demand, population is a large consideration. When consumers expect their income to increase, companies will see an increased demand for goods, products, and services. Disclaimer Copyright, Share Your Knowledge
building a new factory. For example, there is a greater demand for Christmas lights in December than there is in June, there is an increased demand for candy in October than there is during other months and there is an increased demand for raincoats in the spring than there is in the summer. Content Guidelines 2. Refer to fact that the prices of substitutes and complementary goods also affect the supply of a product. The differences in these two points only vary by the price of the transportation of the natural gas. This further increase the supply of food grains in the market. Therefore even if the price of a product increases, the supply would not increase. Government policies can have a significant impact on supply. Non-price factors vary depending upon a wide variety of market influences, climates, and preferences and may change at any given point in a productâs life span. This would potentially decrease the supply of rice in the market. Even retail stations close to each other can have different traffic patterns, rent, and sources of supply that affect their prices. 95 per kg. A better and advanced technology increases the production of a product, which results in the increase in the supply of the product. These types of goods are called inferior goods. Email Support Resource Prices: includes everything from labor to resources to cost of shipping 4.Taxes and Subsidies: Taxes make supply decrease and subsidies make supply increase. Because of this, it is important to stay on top of this ever-shifting climate in order to market a product efficiently. - All rights reserved. Both stock and market price of a product affect its supply to a greater extent. FACTORS OF SUPPLY & DEMAND ... relationship exists between price and quantity when it comes to the supply curve. Price of Related Goods. The majority of industries are a form of oligopoly with a few firms dominating the market. The number and location of local competitors can also affect prices. Non-price supply factors are all those factors, apart from the price of the good, that influence the supply of the good. Let me now switch to Figure 2.2, that shows how when another factor changes, what would be the impact on the demand curve? Likewise, when consumers expect their income to decrease or cease entirely, they are less likely to be in the market for products, goods, and services, thereby decreasing the demand. Lower costs could be due to lower wages, lower raw material costs. For example, the supply of agricultural products increases when monsoon comes on time. However, the fall in the price of a product in future would increase the supply of product in the present market. As trends, fads and styles change, consumer preference does, too. Demand for a product is influenced by various factors other than price. The inputs, such as raw material man, equipment, and machines, required at the time of production are termed as factors. Share Your Word File
When more buyers enter the market, the amount of product consumed on the large scale experiences a drastic uptick. In such a case the seller would wait for the rise in price in future. Certificate Redemption Support: 1.800.450.1575 This means that changing hairstyle preferences among women will also change the demand for related products, such as hairstyling equipment, products, accessories, and colors. Start studying Non-price Factors Affecting Supply. How do these other non-price factors impact quantity demanded? For example, the production of fertilizers and good quality seeds increases the production of crops. Consequently, the production and supply of the product would increase. Because substitute goods are used one in place of another, rather than together, the demand for one will always decrease when the demand for another increases. Because of this, it is wise for marketers to pay attention to non-price factors that affect demand as they prepare to put together a marketing and promotions plan. 95 per kg. Unlike demand, supply refers to the willingness of a seller to sell the specified amount of a product within a particular price and time. Consumer tastes and preferences play a large part in determining the level of demand for a given product. Unlike substitute goods, however, complementary goods affect the demand for related goods on an inverse scale. Likewise, when the number of buyers in a market decreases, the demand for the aforementioned products, goods and services also decreases. In such a case, the supply of his product would be 50kgs at Rs. Your email address will not be published. Overall, price is a factor that affects a product’s supply the most. Price: Refers to the main factor that influences the supply of a product to a greater extent. When price changes, quantity supplied changes. • technology needed to make the good. These costs include wages and salaries, benefits, equipment, lease or rent payments, insurance, overhead, and state and local fees. Khan Academy is a 501(c)(3) nonprofit organization. Therefore, the statement “a seller is willing to sell 500 kgs at the price of Rs. Our mission is to provide an online platform to help students to discuss anything and everything about Economics.