Examkin

Soru

Zorluk: ZorTypes of Supply

In an agro-processing factory in Kwara State where sugarcane is crushed to manufacture refined sugar, molasses is automatically yielded as a byproduct of the same production run. If an increase in consumer demand for sugar leads to a rise in its market price and output, the market supply of molasses will decrease because processing resources are diverted to sugar.

Cevap: Cevap

Cevap

The statement is False. Sugar and molasses are in joint (complementary) supply, meaning an increase in the production of sugar leads to an increase—not a decrease—in the supply of molasses.
The statement is false because refined sugar and molasses exhibit joint (complementary) supply. When two goods are yielded together from a single production process, an increase in the production of the primary good inherently increases the total availability and supply of the secondary byproduct.

Adım Adım Çözüm

1
Identify the relationship between the two goods
Refined sugar and molasses are derived simultaneously from processing the same raw material (sugarcane). Therefore, they are in joint or complementary supply.
Determining whether goods are in joint, competitive, composite, or derived supply dictates how changes in the production of one impact the supply of the other.
2
Analyze the effect of a price/demand increase for the main product
Higher market demand and prices for refined sugar incentivize factory owners to expand total sugarcane crushing operations.
According to the law of supply, higher prices induce higher output of the primary product.
3
Deduce the effect on the joint product (molasses)
Expanding sugarcane crushing yields a larger quantity of molasses as an inevitable byproduct, shifting the supply curve of molasses to the right.
In joint supply, the supply of the byproduct moves in the same direction as the supply of the main product.

Anahtar Kavram

Joint (Complementary) Supply vs. Competitive Supply
Bu soruyu puanla

Konular

Types of Supply

Bu konudan daha fazla soru