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Which of the following is a recognised determinant of the supply of a good, other than the good's own price?
AThe income level of the final consumers
BThe tastes and preferences of the buyers
CThe state of technology used in production
DThe advertising spend of rival sellers
Answer & Solution
Correct answer: C. The state of technology used in production
1. Determinants of supply include prices of related goods, prices of factors of production, technology, government policy and number of sellers.
2. The state of technology directly affects production efficiency and cost, hence supply.
3. Income, tastes and advertising are demand-side influences, not supply determinants.
4. The correct supply determinant is the state of technology.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit III "Supply", p.1_
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