Technology:
A better and advanced technology increases
the production of a product, which results in
the increase in the supply of the product. For
example, the production of fertilizers and good
quality seeds increases the production of
crops. This further increase the supply of food
grains in the market.
Government’s Policies:
Implies that the different policies of
government, such as fiscal policy and
industrial policy, has a greater impact on the
supply of a product. For example, increase in
tax on excise duties would decrease the supply
of a product. On the other hand, if the tax rate
is low, then the supply of a product would
increase.
Cost of Production:
Implies that the supply of a product would
decrease with increase in the cost of
production and vice versa. The supply of a
product and cost of production are inversely
related to each other. 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.
Transport Conditions:
Refer to the fact that better transport facilities
increase the supply of products. Transport is
always a constraint to the supply of products,
as the products are not available on time due
to poor transport facilities. Therefore even if
the price of a product increases, the supply
would not increase.
Population:
As population increases, the demand for goods
increases as well because each member of the
population has needs to be filled.
Natural Conditions:
Implies that climatic conditions directly affect
the supply of certain products. For example,
the supply of agricultural products increases
when monsoon comes on time. However, the
supply of these products decreases at the time
of drought. Some of the crops are climate
specific and their growth purely depends on
climatic conditions.
Tastes and Preferences:
Tastes and preferences of the consumer
directly influence the demand for a commodity.
They include changes in fashion, customs,
habits, etc. If a commodity is in fashion or is
preferred by the consumers, then demand for
such a commodity rises. On the other hand,
demand for a commodity falls, if the
consumers have no taste for that commodity.
Tax:
Increase in taxes such as income tax will
reduce demand in the market because people
will have less disposable income.
Income of the People:
The demand for goods also depends upon the
incomes of the people. The greater income
means the greater purchasing power.
Therefore, when incomes of the people
increase, they can afford to buy more. It is
because of this reason that increase in income
has a positive effect on the demand for a good.
Advertising:
If a product is heavily advertised, the demand
for that product is likely to increase, especially
if the advertisement campaign is effective.
Price of the Product:
There is an inverse (negative) relationship
between the price of a product and the amount
of that product consumers are willing and able
to buy. Consumers want to buy more of a
product at a low price and less of a product at
a high price. This inverse relationship between
price and the amount consumers are willing
and able to buy is often referred to as The Law
of Demand.