00:00:00:00 - 00:00:08:14
Unknown
Just like factors affecting demand, the factors affecting supply as well. So what are the factors that affect supply?
00:00:08:17 - 00:00:33:16
Unknown
What could affect the supply of milk? Since milk comes from cows? Anything that affects the cost of rearing cows should affect the supply of milk. What do cows eat? Well, that is something you could look into. Let's just call it cattle fodder. If the price of cattle fodder goes up, what would happen to the supply of milk?
00:00:33:16 - 00:00:38:06
Unknown
Surely it would make it more difficult to be in the milk business.
00:00:38:08 - 00:00:48:11
Unknown
At any rate, you would find it very difficult to sell the same amount of milk at the old price. You would want to charge more or less.
00:00:48:14 - 00:00:57:06
Unknown
Either way. Just like the way the demand curve shifted. It seems that the supply curve has shifted to the left.
00:00:57:06 - 00:01:20:00
Unknown
Similarly, anything that affects the cost of producing milk will shift the supply curve either left or right, depending on whether the cost has gone up or down. The list could include cost of employees, cost of infrastructure, cost of communication, cost of transport, and so on and on.
00:01:20:00 - 00:01:21:07
Unknown
The list is long.
00:01:21:07 - 00:01:35:02
Unknown
Why don't you think about all the costs of producing milk and how they would affect the supply? We can club all of these together and call it prices of inputs.
00:01:35:02 - 00:01:50:24
Unknown
The other important factor is, of course, technology. What is technology? Well, it's the process by which you take inputs like steel, car parts, employees and fabric and turn it into a car.
00:01:50:24 - 00:02:06:22
Unknown
The importance of technology is very apparent in the case of products. Obviously, steel has to be produced in a factory using some technology, such as a blast furnace, using raw materials such as I know.
00:02:06:24 - 00:02:13:10
Unknown
Better technology will allow you to produce more steel with the same amount of raw materials.
00:02:13:10 - 00:02:18:04
Unknown
technology is also important in the case of services. The
00:02:18:04 - 00:02:29:10
Unknown
spread of the internet has now allowed education, health and banking services to be delivered online. So larger amounts of these services are now available.
00:02:29:10 - 00:02:33:11
Unknown
What is the effect of better technology on the supply curve?
00:02:33:11 - 00:02:39:16
Unknown
By now you should be able to say that it would shift outwards to the right
00:02:39:16 - 00:02:42:15
Unknown
at the same price. More should be available.
00:02:42:15 - 00:02:58:12
Unknown
We should be careful not to restrict the term technology to technical innovations alone. For instance, a new way of organizing the workforce could increase productivity and have the same effect.
00:02:58:14 - 00:03:03:06
Unknown
Innovations in marketing such as online sales are another example.
00:03:03:20 - 00:03:24:08
Unknown
Just as in demand, there are a few other factors that affect supply. Certainly, the weather is very important for agricultural products. Favorable monsoons will shift the supply curve to the right. Since most investments in businesses are financed through loans,
00:03:24:10 - 00:03:34:21
Unknown
The availability of credit is also a factor. That is why we get excited if the central bank reduces the interest rate.
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Just like factors affecting demand, there are factors affecting supply as well. So what are the factors that affect supply? What could affect the supply of milk? Since milk comes from cows, anything that affects the cost of rearing cows should affect the supply of milk.
What do cows eat? Let's call it cattle fodder. If the price of cattle fodder goes up, what would happen to the supply of milk? Surely it would make it more difficult to be in the milk business. You would find it very difficult to sell the same amount of milk at the old price. Either way, just like the demand curve shifted, it seems that the supply curve has shifted to the left. Similarly, anything that affects the cost of producing milk will shift the supply curve either left or right, depending on whether the cost has gone up or down. The list could include cost of employees, cost of infrastructure, cost of communication, cost of transport, and so on. We can club all of these together and call it prices of inputs.
The other important factor is, of course, technology. What is technology? Well, it's the process by which you take inputs like steel, car parts, employees and fabric and turn it into a car. The importance of technology is very apparent in the case of products. Obviously, steel has to be produced in a factory using some technology, such as a blast furnace, using raw materials. Better technology will allow you to produce more steel with the same amount of raw materials. Technology is also important in the case of services. The spread of the internet has now allowed education, health and banking services to be delivered online. So larger amounts of these services are now available. What is the effect of better technology on the supply curve? By now you should be able to say that it would shift outwards to the right. At the same price, more should be available.