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Describe factors which increase the supply of a product.

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Knowledge Checkpoint

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Describe factors which increase the supply of a product. (Worth 4 marks)

if the cost of production falls supply will increase (1)
new technology will increase the supply of a product (1) for example, automation making it possible to increase the production of a product (1)
good weather increases output of agricultural products (1) payment of subsidies/grants encourages firms to increase supply (1)
if taxes are imposed on imported goods, domestic firms will be encouraged to increase supply (1)
prices of substitute goods may encourage firms to divert resources, increasing supply of high priced goods (1)
goods in joint supply − an increase in the supply of one will lead to increased supply of the other (1)
if the price of the product rises producers will divert resources to increase supply (1)

Note: The question asks what increases the supply of a product. While determinants of supply can shift the supply curve and thus increase the supply of a product, an increase in price can ALSO increase the quantity supplied due to movement along the supply curve, following the law of supply.