Determinants of Industry Production (Supply)
Supply is the amount of output of production that producers are willing and able to sell at a given price all other factors being held constant.
The following are the determinants of supply:
Price (P), Numbers of Producers (NP), Taxes (T)
Specification of model is to specify the form of equation, or regression relation that indicates the relationship between the independent variables and the dependent variables. Normally the specific functional form of the regression relation to be estimated is chosen to depict the true supply relationships as closely possible.
The table presented below gives the hypothetical quantity supplied for a particular product (Qs) of a particular place given its price per kilo (P/kl), the Numbers of producers (NP), and tax per kilo (T/kl) for the period 2002 to 2011. (The quantity Supplied is expressed as kilo in millions)
|Year |Qs |P/kl |NP |T/kl | |2002 |21.4 |23 |39 |1.15 | |2003 |23.9 |25 |41 |1.25 | |2004 |25.5 |26 |43 |1.3 | |2005 |22.9 |30 |42 |1.45 | |2006 |24.3 |27 |45 |1.35 | |2007 |22.2 |28 |45...