If a firm purchases an input that is jointly produced with another good, changes in the demand for the other good will have no effect on the price of the input.

Question

Quizplus · Accepted Answer

If the demand for the other good increases, the price of the jointly produced input is likely to increase due to increased demand for the good that it is used in the production of. On the other hand, if the demand for the other good decreases, the price of the input may also decrease due to decreased demand for the good that it is used in the production of.

If a Firm Purchases an Input That Is Jointly Produced