If an increase in the price of crude oil led to an increase in the prices of kerosene and grease,then kerosene and grease are in

Answer Details

Joint supply occurs when two or more goods are produced simultaneously from a single raw material or production process. A classic example is crude oil refining: when crude oil is refined, it yields multiple products including petrol, kerosene, diesel, grease, bitumen, and other derivatives. These products are produced together because they are all fractions obtained from the same distillation process.

When the price of crude oil increases, the cost of producing all its derivatives rises, which leads to an increase in the prices of kerosene, grease, and every other product obtained from crude oil. The key indicator of joint supply is that these goods share the same source and their production is inseparable - you cannot refine crude oil to produce only kerosene without also producing grease and other fractions.

This is different from:

• Competitive supply - where goods compete for the same resources (e.g., using land for maize versus cassava).
• Composite supply - where a good can be obtained from multiple alternative sources.
• Market supply - which simply refers to the total quantity of a good offered for sale at various prices.