An important factor in determining the desired quantity supplied is the cost of the factors of production. Factors of production, or inputs, are simply those things used by a firm or business in producing whatever product(s) is to be sold or supplied. Factors of production include (but aren't limited to) such things as labor, raw materials, machinery and equipment, electricity, rent, and transportation. Anything used in the production of goods and services is an input or factor or production.

A change in the cost of inputs changes the opportunity cost of producing output. A change in opportunity cost leads to a change or shift in supply; or a change in the relationship between desired quantity supplied and market price. We represent this change as a shift in the supply curve.

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