Non-Economic Factors that Shift the Supply Curve

The following factors will influence the economic factors of: Price Cost of production Price of related goods State of technology

Non-Price External Factors Environmental issues Legal requirements Political decisions Trade restrictions Cultural Obligations

Environmental Factors There are two aspects of environmental issues that may affect supply. 1. Factors that are beyond the control of the business E.g. acts of nature (Flood, would decrease supply) 2. How a producer views the environment will effect there production decisions e.g. if a producer wants to be environmentally friendly they may recycle all waste. This may be more costly and time consuming than just dumping it. This will mean they are less productive and less profitable at existing prices

Workbooks page 88 – 89

Trade???? Most of the goods we produce in NZ are traded to other countries What is NZs main exported good? Dairy is the backbone of New Zealand's food and beverage industry - it is the world's top dairy exporter and accounts for a third of the world's dairy trade. As New Zealand's biggest export earner (exports totalled NZ$12.1 billion in 2011), dairy contributes 25 percent to New Zealand's merchandise export earnings.

What are our other exported Goods? The fact that our seasons are the reverse of a lot of the world means we can provide seasonal fruit and vegetables that complement northern hemisphere produce to provide year- round supply. New Zealand also has some of the world's most stringent biosecurity regulations keeping our orchards and produce free of the world's major pests and diseases The New Zealand red meat sector has been a principal driver of New Zealand's economy and identity, generating nearly NZ$8 billion annually in export earnings

What other Goods are Exported? Craft beers, spirits and even our natural spring water are all gaining interest in the rest of the world. Stolen Rum was awarded a Double Gold medal at the San Francisco World Spirits Awards just a month after launching; 42 Below Vodka went from backyard experiment to being bought out by drinks giant Bacardi in fewer than 10 years; and VnC cocktails have become a hit with worldwide A-listers. The industry is one of New Zealand's fastest growing exports. New Zealand wine exports were worth NZ$1.14 billion in 2011, compared to NZ$ million in 2006

What other Goods are Exported? Seafood is among New Zealand's top 10 largest exports, and international sales have grown from just NZ$500 million to NZ$1.5 billion over the past 20 years. Products are exported all over the world. Major markets are China, Australia, the United States, Hong Kong and Japan. Currently, the top export seafood products are rock lobster, mussels, hoki, squid and salmon

Trade A lot of the goods we buy in NZ are not made in NZ Check labels of clothes etc. Who do we trade with Australia China, People’s Republic of United States of America Japan Germany

Trade Factors Anything that effects imports and exports is a trade factor. A tariff is a tax on imports, this increases the cost of the goods brought by the importer. The tax goes to the Government. A tariff being introduced on imports will reduce supply. A quota is a quantity limit on the amount that can be imported, this reduces supply

Tariffs When you bring goods into New Zealand you may need to pay Customs duty and other charges on their arrival. What you pay will depend on a number of factors such as; whether the goods are for your own personal use; whether they are covered by a concession or duty- free allowance; whether they are for business or commercial use If you are shopping online, you may have to pay duty and GST on your goods when they arrive New Zealand. You can use What's My Duty? our duty estimator to work out how much you may need to pay.What's My Duty? harges/feetypes/Pages/default.aspx

Trade Factors The exchange rate may also have an impact on supply The exchange rate is the value of one currency in relation to the currency of another country. Foreign Exchange rate changes will effect the price of exports and imports World market prices will effect Domestic prices so an increase in the payout to Dairy Farmers will almost certainly lead to higher prices in NZ for dairy products.

Workbooks page 92-93

Political Factors Any policy decision made by Government is a Political Factor Subsidies – are a payment given to firms by the government in order to encourage the production of a particular good or service. Subsidies represent a decrease in costs by the producer so they will increase supply S S + Subsidy Merit Good = Goods and services the government believes are good for you. E.g Milk

Political Factors Sales Taxes (Indirect Tax) – is a payment to the government for every unit consumed for a good the government may think is bad for society. Taxes increase the costs to the producer so will result in a decrease of supply e.g. GST S S + Tax Demerit Good = Goods and services the government believes are bad for you

Legal Factors Any law that a producer must comply with is a legal factor e.g. Health and Safety and Compliance Costs Complying with these laws will often increase cost of production Some times the law may directly reduce supply e.g. hours that businesses can be open such at pubs S S1 New Safety Gear is required

Workbooks page 96-97

Cultural Factors Businesses being closed at Christmas and Easter reduces supply, this is a religious factor based on our Christian heritage. Tangi (Traditional Maori funeral) leave is both a legal and cultural factor that would reduce supply. The Resource Management Act specifies that Maori culture, traditions, ancestral lands, water, sites, waahi, tapu and taonga are matters of national importance. Under the Treaty of Waitangi, if a firm wanted to develop their business near an area of ancestral lands, they may need to involve tangata whenua.

Workbook page 85 – 10mins!!