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Which of the following are determinants of supply? A

Economics Dec 12, 2020

Which of the following are determinants of supply?

A. Price expected in the future

B. Prices of related goods

C. Consumer tastes

D. All the above

Expert Solution

Determinants of supply are factors that would cause sellers to change their behavior. Specifically, these factors would cause sellers to want to produce more or less regardless of how much they are able to charge for a good or service. These factors are independent of things that would influence buyer behavior and demand. Clearly, consumer tastes would be one of these things that would influence buyer behavior. The prices of related goods (think substitutes and complements) would also cause demand for a particular good or service to change. The correct answer is A. If sellers expect the price of a good or service that they produce to rise in the future, for instance, they would respond by restricting their supply today in the hopes of saving product to sell at the more favorable price.

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