5.2 Supply. Factors determining the sentence. The law of Supply
The supply of goods on the market - is another, no less important, aspect of entrepreneurship, which expresses a direct relationship between price and quantity of product produced and offered for sale. Prices and sales of goods vary unidirectional: if the price rises, the market will come to sell more goods. And vice versa.
Major, major factor here is the price. For each of the great variety of goods price points to the need or reduce its production if demand declined, or enhance its production if demand is stable or increasing. The level of prices of products offered depends revenue, profit, profit. Higher than they are, the faster growing market supply of goods, and vice versa. Market supply of goods makes sense only if it is confirmed to meet the price.
The law of supply, as we see from Fig. 6. States that, other things being equal, the higher the price of the goods, the greater the amount can be made and presented for sale in the markets.
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Fig.6. Supply curve
Moving along the supply curve from point B to point A, we celebrate the growth of the goods under the influence of increased prices; going down the curve from point A to point B is a reduction in the volume of trade in the markets influenced by falling prices for these commodities.
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Fig.6.1 Supply growth under Figure 6.2 reduction the influence of non-price proposals under the influence factors non-price factors
The offer is constantly changing. Mobile nature of the proposal is due to the action of non-price factors. For non-price factors of market supply include: - The level of technology; - Tax policy of the state; - The prices of resources; - The number of sellers; - Subjective expectations of the producers. These non-price factors shift the supply curve up to the left and right down at a constant price level.
Figure 6.1 shows the dotted line offers its increase under the influence of non-price factors. Increasing supply - shift the entire curve to the right and up, an increase in production of goods for the same, do not change, the price. Figure 6.2 shows the decrease on offer: the dotted supply curve shifted to the left and down. This is also due to lower supply of non-price factors and expressed in the loss of production at not changing the price per unit of product.