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Question

Difficulty: MediumTypes of Supply

In Nigeria's wood processing industry, an increase in the demand for sawn timber causes a rightward shift in the supply curve of sawdust because timber and sawdust exist in a competitive supply relationship.

Answer: Answer

Answer

The statement is false because sawn timber and sawdust are in a joint (complementary) supply relationship, not a competitive supply relationship.
The statement is false because sawn timber and sawdust are joint products. When timber production increases to satisfy higher market demand, the output of sawdust automatically expands, demonstrating joint (complementary) supply rather than competitive supply.

Step-by-Step Solution

1
Analyze the production relationship between sawn timber and sawdust.
Sawdust is an automatic byproduct generated when logs are processed into sawn timber.
Classifying the economic relationship requires identifying how the output of one product affects the output of the other.
2
Differentiate joint supply from competitive supply.
Joint supply occurs when two or more items are produced together from a single source, whereas competitive supply occurs when products compete for the same productive resources.
Applying the correct definitions ensures precise classification of economic supply types.
3
Evaluate the validity of the statement.
Because producing more timber automatically yields more sawdust, the two goods are in joint supply. Therefore, describing their relationship as competitive supply is incorrect.
The premise that they exist in a competitive supply relationship contradicts the empirical and economic nature of joint production.

Key Concept

Joint (Complementary) Supply vs. Competitive Supply
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Topics

Types of Supply

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