Impact of Inputs, Costs and Production Decisions on Supply of Goods and Services in UK Economy

Economics for
Business

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Why inputs and costs impact the supply of goods and services in terms of production
decisions......................................................................................................................................3
Explain the perfect competition market and how it impact the supply of goods and services by
applying in any UK based industry.............................................................................................6
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Economics is the science which helps in making decisions in the presence of scarce
resources. These resources are used to produce an item or service for achievement of the goals.
Supply is the measure of the goods or service which are produced and sent in the market for the
consumers. The sender of the commodities have to be updated about the services needed in the
market and about the trends also (Basri 2020). In this report, The costs and inputs which are
essential for the supply of the mechanise is explained by taking the consideration of the UK
economy. The impact of the production decision on the supply of the service and goods also
defined by taking the example of the economic condition of UK. The role of the perfect
competition in the long and short run market is being defined and the factors which can effect the
supply of of good and services in the manufacturing industry is discussed.
TASK
Why inputs and costs impact the supply of goods and services in terms of production decisions.
Supply: It the amount of good or services that are available to to customers. The supply
will depend on the demand of the products in the market and are then sold in an competitive
market place. It is a basic concept of the demand and supply that if the price of goods increase,
the supply will also increase and if the price of the products decrease, supply will also decrease.
It shows a positive relationship between the supply and the price of the good and services (Elia,
Gnoni and Tornese, 2020). The cost of the goods and the price of the inputs such as raw
materials, labour etc., contributes to the increase in the price of the goods sold. The supply means
how much the of the items a businessman can supply to its purchaser and at what cost.
Law of supply states that the price and quantity of good are directly related to each other,
consisting all other factor of production constant. It shows that the behaviour of the producer
changes with the change in the price of items or services with the change in time. It could be
shown as

The above graph is sh\owing the direct relationship between quantity supplied and the price as
explained above. The graph is showing the upward sloping when the price of good was at P3,
providers were supplying the goods at Q3. As the price starting increasing, the quantity of goods
supplied also accelerated.
Inputs: Inputs are the factor of products which are divided into the four categories such as land,
labour, capital and entrepreneurship. These are helpful in creating good or services which are
measured by the Gross Domestic product of UK economy (Foerstl, Franke and Cataldo, 2021).
 Land: It is a natural resource which can be found on the earth in which the crops or the
office building comes. But when talking about the economy of the country, it has a wider
prospective. So besides the above it includes the coal, oil, sea, oceans , rivers, solar
energy etc. in terms of renewable and non- renewable resources.
 Labour: It includes the mental and physical capacity which is utilised in producing the
good and services. These are supplied on the basis of the population, age attitude and
leaving of work. It is measured on the basis of the output the person is producing during
his time of work.
 Capital: It is the amount of money or resources used to produce the good and services. It
can include, the factory cost, machinery, equipment and commercial buildings, etc..