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P-E RATIO: Also termed the price-earnings ratio, this is the ratio of the current price for one share of corporate stock to the earnings (profit) per share of stock. This is used by many financial analysts and investors as an indicator of a company's performance and potential for future growth. A relatively high price-earnings ratio suggests that investors think the company has a great deal of future growth potential. It can also be a sign, however, that the company is seriously overpriced and due for a big drop.
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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 CurveTo 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.
Recommended Citation:COMPLEMENT-IN-PRODUCTION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: December 5, 2024]. Check Out These Related Terms... | | | | | | | | Or For A Little Background... | | | | | | | | | | And For Further Study... | | | | | | | | |
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Rosemary, long associated with remembrance, was worn as wreaths by students in ancient Greece during exams.
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"Every man must decide whether he will walk in the light of creative altruism or in the darkness of destructive selfishness." -- Martin Luther King, Jr., clergyman
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