Question

Identify one determinant of supply that has influenced the price that you have recently purchased and how it influenced markets.

Answer 1

Determinant of Supply : Government imposition of taxes on producers

Explanation: Recently, in order to cover the loss to the economy due to the outbreak of COVID-19, the government had decided to impose heavy taxes on purchases of luxury goods, say luxury cars like Rolls Royce

Imposition of high tax on these goods led to producers passing on these taxes to consumers in the form of high prices.

This led to reduced demand for these goods and thus loss to these producers.

This influenced market in a way that demand for these goods fell drastically, leading to lower sales and lower profits to sellers.