Supply as a Function of The Price of Inputs

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Supply as a Function of The Price of Inputs
The functional relationship between the supply of a good and the price of us factor inputs is a backward vertical relationship that is always negative. This means that as the price of factor inputs increases, the cost of production lip which results in decrease in supply reflecting increased relative scarcity of the good. The factor the coefficient of cross elasticity for each of the several factor inputs will depend their relative importance in the production of goods.

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Supply as a Function of The Price of Inputs