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Difficulty: EasyTypes of Supply

A agricultural processing factory in Benue State crushes soybeans to extract soybean oil for domestic cooking. In the same production process, soybean cake used for livestock feed is inevitably produced along with the oil. What type of supply is illustrated by soybean oil and soybean cake?

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

Answer

Joint supply
Joint supply (also known as complementary supply) occurs when two or more goods are produced simultaneously from a single process or raw material. An increase in the output of the main product (soybean oil) automatically leads to an increase in the output of the byproduct (soybean cake).

Step-by-Step Solution

1
Identify the production relationship between soybean oil and soybean cake in the scenario.
Both products originate simultaneously from processing the same raw material (soybeans).
Understanding whether goods are produced together or compete for factors determines their supply classification.
2
Match the production relationship to the appropriate economic term.
Products that are derived together from the same origin represent joint supply.
An increase in the production of one product automatically increases the supply of the byproduct.

Key Concept

Joint (Complementary) Supply
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Topics

Types of Supply

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