Joint Supply

Published Oct 25, 2023

Definition of Joint Supply

Joint supply is an economic concept that refers to a situation where the production of one good results in the simultaneous production of another good. In joint supply, the two goods are physically or technologically linked in the production process, meaning that the production of one good cannot be increased or decreased without affecting the production of the other good.

Example

An example of joint supply is the production of beef and leather. When a cow is slaughtered for its meat (beef), the hide of the cow is also obtained, which can be used to produce leather. In this case, the production of beef and leather are linked because they are both derived from the same raw material – the cow. Increasing the production of beef would result in an increase in the production of leather, and vice versa.

Another example of joint supply is the production of crude oil and natural gas. When oil is extracted from underground reservoirs, natural gas often accompanies it. This means that the production of oil and natural gas are linked, and an increase in oil production would result in an increase in natural gas production, and vice versa.

Why Joint Supply Matters

Understanding the concept of joint supply is important for various reasons. It allows economists and policymakers to analyze the relationship between the production of different goods and the interdependencies that exist between them. Joint supply can have implications for pricing, resource allocation, and efficient utilization of resources. Additionally, it helps to shed light on the complexities of production processes and how changes in the production of one good can impact the supply of another good.