(a) What is supply? [5 marks] (b) Describe any five determinants of supply. [15marks]

Explanation

(a)Supply refers to the quantities of any commodity that producers are able and willing to offer for sale at alternative prices over a given period of time

(b) Factors that determine supply.

(a)The price of the commodity: The higher the price, the greater the supply and vice versa.

(b)The number of producers Usually the larger the number of producers the greater the supply

(c)Weather conditions - especially in agricultural production

(d)Government policythat may or may not encourage production e.g. taxation, subsidy, etc

(e) Cost of production- A rise in cost of production will reduce supply and vice versa

(f)Time lag - It takes some time in certain productive activities to effect changes in the market With regard to supply e g in increasing the supply of cocoa or ships if their prices rise, it takes years to adjust supply

(g)Technological breakthrough:New inventions or innovations may greatly increases productivity and hence supply.

(h)price of other commodities- a change In the price of other commodities may divert production efforts into those areas.

(i) Mobility of factors of production.