Question

Describe three factors that affect the supply curve of a firm.

Hint:

A rightward shift in the supply curve occurs when the firm can produce more due to price increases, lower input costs, or better technology.

Answer 1

Step 1: Price of the good or service.
The price of a good or service is a primary factor affecting its supply. As the price increases, the quantity supplied by a firm typically increases due to higher profitability, shifting the supply curve to the right.
Step 2: Input prices.
The cost of inputs or factors of production (e.g., labor, raw materials) directly affects supply. If input prices increase, the cost of production rises, leading to a decrease in supply and a leftward shift of the supply curve.
Step 3: Technological advancements.
Improvements in technology can make production more efficient, reducing costs and increasing the supply of goods. This results in a rightward shift of the supply curve.
Step 4: Conclusion.
Thus, the supply curve of a firm is influenced by the price of the good, input prices, and technological advancements. Final Answer: \[ \boxed{\text{Factors affecting the supply curve include price of the good, input prices, and technological advancements.}} \]