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Difficulty: EasyTypes of Supply

Electricity in Nigeria can be obtained from several alternative sources, such as hydroelectric dams, natural gas power plants, and solar energy installations, to satisfy the total market demand for power. Which type of supply is demonstrated when a single commodity is made available through multiple distinct sources?

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

Answer

Composite supply
The correct answer is composite supply because composite supply refers to the aggregate supply of a commodity that comes from different, alternative sources to fulfill one overall consumer demand (in this case, total national demand for electricity).

Step-by-Step Solution

1
Analyze the scenario given in the stem
Electricity (a single product) is provided via hydroelectric power, natural gas plants, and solar installations (multiple separate sources).
Identifying the relationship between the sources of production and the final commodity helps classify the type of supply.
2
Apply economic definitions of supply types
When total market demand for a commodity is met by combining output from different sources, it matches the definition of composite supply.
Composite supply specifically describes a situation where alternative sources contribute to the overall market supply of one item.

Key Concept

Composite Supply
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Topics

Types of Supply

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