A Level Economics AQA Practice Exam

In which scenario is joint supply most evident?

1. Producing cars and bicycles

2. Producing butter and skimmed milk from whole milk

3. Producing raw materials for industry

4. Producing luxury and essential goods

The correct answer is: Producing butter and skimmed milk from whole milk

Joint supply occurs when the production of one good inherently leads to the production of another good. In the scenario where butter and skimmed milk are produced from whole milk, joint supply is clearly evident. When dairy producers process whole milk to make butter, they also yield skimmed milk as a byproduct. This means that the production of butter directly involves the simultaneous production of skimmed milk, showcasing the relationship between the two products. The other scenarios involve goods that do not have such a direct relationship in their production processes. For example, producing cars and bicycles involves distinct manufacturing processes for different types of vehicles, and while both use similar factors of production, they do not produce one from the other. Similarly, the production of raw materials for industry encompasses a broad range of materials that are not inherently linked in terms of joint production. Regarding luxury and essential goods, these also do not exhibit a relationship that results in joint supply during production; they are simply different types of goods produced for different segments of the market.