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Question

Difficulty: EasyTypes of Supply

A commercial farmer uses a fixed parcel of land to cultivate either maize or cassava. Allocating more land to cassava cultivation automatically reduces the amount of land available for maize production. Which type of supply is demonstrated by cassava and maize in this scenario?

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

Answer

Competitive supply
Competitive supply occurs when two or more commodities require the same limited factor of production. Increasing the allocation of resources to produce one product automatically reduces the quantity of resources available for the alternative product.

Step-by-Step Solution

1
Analyze the resource relationship between the two goods in the scenario.
Cassava and maize require the same limited input (agricultural land).
Producing more cassava leaves fewer resources available to produce maize.
2
Classify the economic supply relationship.
Competitive supply.
When products compete for the same factors of production, an increase in the supply of one leads to a decrease in the supply of the other.

Key Concept

Competitive Supply
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Topics

Types of Supply

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