Joint Supply

Joint supply occurs when two goods are produced together from the same origin / raw material.

Examples of joint supply

  • If you grow wheat, you get both wheat and straw.
  • Producing refined flour, creates bran as a byproduct. Bran can be used as fibre ingredient or using in compost
  • If you increase the supply of beef (keeping more cattle) you will also increase the supply of leather (a byproduct of beef)
  • If you decrease the supply sheep, there will be a fall in both mutton and wool.
  • If you increase supply of petrol, you will get other byproducts of refining oil, such as butane.

Diagram of joint supply

  • joint-supplyThe diagram on the left represents the supply of beef. If there is increase in demand for beef, then supply of beef will rise.
  • With more cows in production, there will be also a shift to the right in the supply of leather.

By-product

Joint supply usually arises because producing a good, creates a by product. Refining oil, created gasoline (petrol) as by-product – with advent of petrol engine, the by-product became more desirable than the initial product of kerosene.

Alfred Marshall on Joint supply

“We may now pass to consider the case of joint products: i.e. of things which cannot easily be produced separately; but are joined in a common origin, and may therefore be said to have a joint supply, such as beef and hides, or wheat and straw.

As there is a joint demand for things joined in a common destination: so there is a joint supply of things which have a common origin.”

Marshall, Alfred. Principles of Economics (1890) Book five, chapter six.

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