If in the short-run commodity X and commodity Y are supplied jointly, which of the following is correct?

Answer Details

When commodity X and commodity Y are supplied jointly (produced together as a result of the same production process), an increase in demand for X will increase the supply of Y.

Joint supply means that producing one commodity automatically produces the other. Classic examples include beef and leather (both come from cattle) or petrol and kerosene (both come from refining crude oil). If demand for X rises, producers respond by increasing production of X. Because X and Y are produced together, any increase in the production of X inevitably produces more Y as well. The supply of Y therefore increases as a by-product.

The other statements are incorrect:

• "An increase in demand for Y will raise the price of X" - In fact, increased production of Y (to meet demand) brings more X onto the market as well, which tends to lower the price of X (increased supply of X pushes its price down), not raise it.
• "An increase in demand for X will cause less of Y to be produced" - The opposite is true. More X means more Y, not less, because they are produced together.
• "An increase in demand for X will leave the supply of Y unchanged" - This is also incorrect. The supply of Y will increase because producing more X necessarily produces more Y.