WAEC Economics 2014 Theory — Question 3

Model answer

(i) On a price–quantity graph, the supply curve for palm oil shifts to the right, from S₀ to S₁, at the constant price P₀=$6.00; quantity supplied increases from q₀ to q₁ even though price is unchanged. (ii) The two commodities have joint supply — an increase in the price of one commodity increases the quantity supplied of the other because they are jointly supplied from a common source (e.g. palm oil and palm kernel oil, both from the oil palm fruit), causing an outward shift in supply of the related product even at a constant own-price.