Explain five methods that the government may use to increase supply of goods in the market. (10 marks)

Methods that the government may use to increase supply of goods in the market

Methods that the government may use to increase the supply of goods in the market include:

1. Reduce the taxes levied on producers. This causes a reduction in the cost of production hence motivating producers to increase production.
2. Increase subsidies. The government meets part of the production cost hence making production more affordable.
3. Eliminating quotas on production. By not limiting the quantity of goods to be produced, the producers are free to supply as much as they can to the market.
4. Setting favourable producer prices. The government fixes the prices at a high level which encourages emergence of new producers! expansion of existing ones.
5. Improving access to credit. The government extends loans to producers through bodies like K.I.E., IDB and ICDC to boost investment in production.
6. Facilitating marketing. The government may form agencies that buy produce to cushion producers and stabilize selling prices e.g. through NCPB.
7. Availing new research findings and technology to producers. New methods of production from government research bodies like KARI, KIRDI KEFRI will help boost supply.

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