Which of the following is a determinant of supply?

The correct response highlights both production costs and future price expectations as determinants of supply, reflecting key concepts in microeconomic principles.

Production costs play a crucial role in determining the supply of a good or service. When production costs decrease, firms are able to produce more at a lower expense, which can lead to an increase in supply. Conversely, if production costs rise, this may lead to a decrease in the quantity of goods supplied, as higher costs can make production less profitable for firms.

Future price expectations also significantly influence supply. If producers anticipate that prices for their goods will rise in the future, they may reduce current supply to sell more later at a higher price. On the other hand, if they expect prices to fall in the future, they may increase current supply to sell before the price declines.

Consumer preferences, while important for determining demand, do not directly affect supply. They influence the quantity of goods consumers are willing to purchase at different price levels but do not directly alter the factors that affect how much suppliers are willing and able to produce.

By choosing both production costs and future price expectations, this response accurately covers two critical determinants that affect how much of a good producers are willing to supply in the market.