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Effect of change in Input price on the supply curve of the firm.

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  Learning Contents:                                                              ·              Impact of rise in input price on supply of the firm. ·              Impact of fall in input price on supply of the firm. The role of inputs or factors of production is very crucial for the production of the goods or services.   Inputs such as raw material, machinery, land, and, labor are most commonly used inputs in the production process.   Therefore, production is mainly dependent on the inputs.   A change in input price will not only impact the production cost but affect the supply as well. If production cost rises owing to rise in input cost will further decrease the supply of the firm, whereas, If production cost falls owing to fall in input cost will further increase the supply of the firm. Hence, the impact of change in input price on the supply curve can be understood into two categories as below: 1. Impact of rise in input price on supply of the firm. A rise in input cost
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Effect of change in Technology on the supply curve of the firm.

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  Learning Contents:                                                               ·              Impact of adopting a new or advanced technology on the supply of the firm. ·              Impact of continuing with an old or outdated technology on the supply of the firm. Technological improvements transform the way goods are usually produced and consumed. With technological improvements, firms can create new, innovated or improved goods and services which not only will increase firm’s production or supply but profits too. In simple words, firms can increase the supply of goods and services by using the updated technology. Therefore, the supply of the firm is positively related to the state of technology. Similarly, consumers are also equally benefitted from the technological improvements. They consume and experience better goods and services at reasonable prices, whereas, any degradation of technology not only deters the firm’s profits and supply but also affect the way consumers co
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Difference between Contraction of Supply and Decrease in Supply

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   Learning Contents:                                                              ·           Difference between  Contraction of Supply and Decrease in Supply. Difference between Contraction of Supply and Decrease in Supply   Basis     of Difference      Contraction of Supply     Decrease in Supply   Meaning When quantity supplied for a commodity falls due to fall in the price, keeping other factors as constant is called contraction of supply. When supply for a commodity decreases due to change in other factors, keeping price as constant is called decrease in supply. Cause Fall in price of the commodity is  the  sole cause for the contraction of supply. Several causes such as: a. Change of firm’s objective from sales maximization to profit maximization. b. When firm is operating on an outdated technology. c. Government imposes more taxes and grants less
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Difference between Extension of Supply and Increase in Supply.

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  Learning Contents:                                                             ·           Difference between Extension of Supply and Increase in Supply. Difference between Extension of Supply and Increase in Supply.   Basis     of Difference      Extension of Supply     Increase in Supply   Meaning   When quantity supplied for a commodity rises due to rise in the price, keeping other factors as constant is called an extension of supply.     When supply for a commodity increases due to change in other factors, keeping price as constant is called an increase in supply. Causes Rise in price of the commodity is the sole cause for the extension of supply. Several causes such as: a. Change of firm’s objective from profit maximization to sales maximization. b. Introduction of a new and advanced technology. c. Government grants more subsidies and
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Change in supply/ Shifts in supply curve.

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    Learning Contents:                                                               ·              Increase in   supply ·              Decrease in   supply    Introduction As studied in previous post related to the determinants of supply that states, it is not only the price which cause change the supply for the commodity but in the real world there also exist other factors such as price of related goods, objective of the firm, government policies, technology changes, etc. that affect the supply for the commodity. Change in supply indicates that supply for the commodity changes due to change in other factors keeping the price of the commodity constant. In other words, when supply for the commodity increases or decreases due to change in other factors or determinants of supply, other than the own price of the commodity is called as ‘ shifts in supply curve’. Shifts in supply curve are also known as change in supply. Such shifts in supply curve may be either increase in sup
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