Supply of a commodity is affected by following factors : 

(a) Price of factor inputs – Supply of a good is affected by the cost of production and there is inverse relationship between cost and supply of a commodity. When there is a fall in the prices of factor inputs, the production of the commodity becomes more profitable in comparison to other commodities. As a result, the supply of the commodity will increase. Conversely, when there is a rise in the prices of factor inputs, the marginal cost of production increases and there will be decrease in the supply. 

(b) State of technology – Technology of production affects the marginal cost of production. Where there is an improvement in technique of production, it is possible to produce more goods witlj the same inputs. As a result of higher productivity, there will be lower cost of production and the production of the commodity becomes more profitable in comparison to other commodities. As a result, the supply of the commodity will increase. 

(c) Government taxation policy – Supply of a commodity is affected by the cost of production and there is an inverse relationship between cost and supply of the commodity. If the government increases taxes on the commodity, it will increase the cost of production adversely and hence supply decreases. If the government decreases the tax, the cost of production will fall and the producer will be induced to increase the supply of the commodity