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Difficulty: MediumDeterminants and Changes in Supply

A livestock ranching enterprise in Northern Nigeria significantly increases its herd size to meet a surging market demand for beef. As a direct result of this expanded beef production, what immediate change occurs in the market supply curve for cattle hides?

  1. The supply curve for cattle hides shifts outward to the right.Answer
  2. B
    The supply curve for cattle hides shifts inward to the left.
  3. C
    There is a upward movement along the existing supply curve for cattle hides.
  4. D
    The supply curve for cattle hides remains entirely unchanged.

Answer

The supply curve for cattle hides shifts outward to the right.
Beef and cattle hides are classic examples of joint (or complementary) supply. When farmers increase cattle production to supply more beef, cattle hides are automatically produced in larger quantities as a by-product. Because this increase in hide availability occurs independently of the market price of hides, it constitutes an increase in supply, which shifts the supply curve of hides outward to the right.

Step-by-Step Solution

1
Identify the relationship between the two goods described in the scenario.
Beef and cattle hides are joint products derived simultaneously from cattle slaughtered for meat.
Understanding whether goods are in joint or competitive supply dictates how a change in the production of one affects the supply of the other.
2
Determine the impact of increased primary production on the joint product.
Increasing beef production yields more cattle hides as a natural by-product.
In joint supply, producing more of product X inherently increases the available quantity of product Y at every price level.
3
Translate the physical increase in production into graphical supply curve movement.
An increase in supply at all prices represents an outward (rightward) shift of the supply curve.
Changes caused by non-price determinants (such as increased output of a joint product) cause the whole curve to shift, rather than moving along the curve.

Key Concept

Joint Supply and Non-Price Determinants of Supply
Estimated Time:1m 0s
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Topics

Determinants and Changes in Supply

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