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What are the five SOS ( sources of supply) ?

User Misun
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Final answer:

The five sources of supply refer to the main factors that can cause shifts in the supply curve, which include changes in the cost of inputs, natural disasters, new technologies, and the impact of government decisions. These factors can either increase supply, shifting the curve right, or decrease it, shifting the curve left.

Step-by-step explanation:

When we talk about the sources of supply (SOS), we refer to factors that can cause the supply curve to shift either to the right (an increase in supply from So to S1) or to the left (a decrease in supply from So to S1). These factors include:

  • Changes in the cost of inputs: If the cost of inputs goes down, production becomes cheaper, which can increase supply. Conversely, if the cost of inputs rises, production costs increase, and supply may decrease.
  • Natural disasters: Events like hurricanes or droughts can disrupt production and supply chains, leading to a decrease in supply. Recovery from such disasters can eventually increase supply.
  • New technologies: Innovations can make production more efficient, leading to an increase in supply. On the other hand, if technology becomes outdated, supply might decrease as production becomes less efficient.
  • Government decisions: Policies such as subsidies, taxes, and regulations can affect the cost and ease of production, thus impacting supply. Supportive government policies might increase supply, while restrictive ones could decrease it.

These four factors, when they change, can impact how much firms are willing to supply at any given price.

User Danzan
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