Google
Tuesday 
July 23, 2019 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
SHORT-RUN SUPPLY CURVE: For a perfectly competitive firm, the marginal cost curve that lies above the average variable cost curve. This segment of the marginal cost guides a perfectly competitive firm's profit maximizing production as it equates price to marginal cost. Because the marginal cost curve is positively sloped (due to the law of diminishing marginal returns), each firm's supply curve and the market supply curve are also positively sloped. The law of diminishing marginal returns thus provides an explanation for the law of supply. However, this only works for firms with NO market control. Monopoly, monopolistic competition, and oligopoly, with market control, do not achieve the same result.

Visit the GLOSS*arama


COMPLEMENT-IN-PRODUCTION:

One of two (or more) goods that are simultaneously produced using a given resource. A complement-in-production is one of two alternatives falling within the other prices determinant of supply. The other is a substitute-in-production. An increase in the price of one complement good causes an increase in supply for the other.
Complements-in-production are two or more goods that are jointly produced using a given resource. The production of one good automatically triggers the production of another, often as a bi-product. Both goods are simultaneously produced from the same resource. The production of one good does not exclude the production of the other, as would be the case for substitutes-in-production. In fact, it promotes the production of the other. Produce one, produce both.

Agricultural producers frequently generate bi-products when they produce a primary good, such as wheat and hay. Cattle ranchers produce both beef and leather from the same cattle resource. Lumber mills use timber resources to the produce two-by-fours and sawdust.

The price of a complement-in-production is part of the other prices supply determinant. A change in the price of a complement-in-production causes a change in supply and a shift of the supply curve. An increase in the price of one complement good causes an increase in the supply of the other. A decrease in the price of one complement good causes a decrease in the supply of the other.

Shifting the Supply Curve

To illustrate this process consider the simultaneous production of two goods--beef and leather. Each is jointly produced using the same cattle resources. When producers produce one, they produce both.

Complement-in-Production
Leather


How is the supply of leather affected if the price of beef should change?

  • A Higher Price: Suppose the price of beef increases. Profit-minded cattle ranchers undoubtedly react according to the law of supply and increase the quantity supplied of beef. However, in that this generates leather as a bi-product, more leather is automatically produced. The result is an increase in the supply of leather and a rightward shift of the supply curve. Click the [Price Increase] button to demonstrate.

  • A Lower Price: Suppose the price of beef decreases. Profit-minded cattle ranchers also likely react according to the law of supply and decrease the quantity supplied of beef. However, now there is less leather generated as a bi-product, with less leather automatically produced. The result is a decrease in the supply of leather and a leftward shift of the supply curve. Click the [Price Decrease] button to demonstrate.

<= COMPLEMENT-IN-CONSUMPTIONCOMPTROLLER OF THE CURRENCY =>


Recommended Citation:

COMPLEMENT-IN-PRODUCTION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2019. [Accessed: July 23, 2019].


Check Out These Related Terms...

     | substitute-in-production | complement good | substitute good | substitute-in-consumption | complement-in-consumption | other prices, supply determinant | supply determinants |


Or For A Little Background...

     | supply | market supply | supply price | quantity supplied | law of supply | supply curve | change in supply | change in quantity supplied | ceteris paribus |


And For Further Study...

     | market | Marshallian cross | comparative statics | competition | competitive market | producer surplus | other prices, demand determinant | demand determinants |


Search Again?

Back to the WEB*pedia


APLS

BLACK DISMALAPOD
[What's This?]

Today, you are likely to spend a great deal of time at an auction trying to buy either a remote controlled World War I bi-plane or a wall poster commemorating Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki. Be on the lookout for poorly written technical manuals.
Your Complete Scope

This isn't me! What am I?

Two and a half gallons of oil are needed to produce one automobile tire.
"The roots of education are bitter, but the fruit is sweet."

-- Aristotle, philosopher

GAB
General Agreements to Borrow
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2019 AmosWEB*LLC
Send comments or questions to: WebMaster