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Question

Difficulty: MediumTypes of Supply

The total supply of sugar required by industrial beverage manufacturers in Nigeria is obtained simultaneously from domestic sugarcane estates, local processing plants, and international importers. What type of supply is exemplified by these distinct sources combining to satisfy a single market demand?

  1. Composite supplyAnswer
  2. B
    Joint supply
  3. C
    Competitive supply
  4. D
    Derived supply

Answer

Composite supply, because the total market supply of the commodity is aggregated from several independent supply sources to meet one specific market requirement.
Composite supply occurs when a single market demand is satisfied by combining outputs from diverse suppliers or production avenues. In this scenario, domestic farming, local processing, and foreign imports together constitute the composite supply of sugar.

Step-by-Step Solution

1
Analyze the market scenario described in the question stem.
Multiple independent production and supply sources (domestic estates, local processors, and foreign importers) are contributing to meet a single market demand (sugar for industrial beverage manufacturing).
Identifying the relationship between the sources of supply and the target demand determines the category of supply.
2
Evaluate the economic definitions of the supply classifications.
Composite supply is defined as the total supply of a good composed of multiple distinct suppliers or production channels meeting one overall demand.
This directly matches the scenario presented.

Key Concept

Composite Supply
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Topics

Types of Supply

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